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A Staff Report 






Published Jointly by University of Alabama Press, University, Alabama 

and The University of Tennessee Press, Knoxville, Tennessee 


Library of Congress Catalog Card Number: 56-130J2 



Ihe universities of Alabama and Tennessee have 
long reflected the interest of their states in the Tennessee Valley 
Authority. In numerous ways the Bureaus of Public Administration 
of these two institutions have worked co-operatively with TVA for 
nearly a quarter-century. This co-operative effort has taken the form 
of educational ventures such as participation in the Southern Regional 
Training in Public Administration, the development of research proj- 
ects, and the joint publication of materials in public administration. 
The publication of this volume jointly by the university presses of 
Alabama and Tennessee is a further testimony to this interest. 

This volume is a series of essays by staff members of TVA based 
upon lectures originally delivered at Florida State University. These 
essays constitute a report by staff members on the activities of TVA 
during its first twenty years of existence. They do not, necessarily, 
represent views of the publishers. 

The essays were edited by Roscoe C. Martin, Professor of Political 
Science at Syracuse University, who was Director of the Bureau of 
Public Administration at the University of Alabama from 1937 to 
1949. The publication of the present volume is the result of the strong 
interest of Richard O. Niehoff, formerly Administrative and Educa- 
tional Relations Officer of TVA's Division of Personnel. Mr. Niehoff 
handled negotiations with the authors throughout the process of revi- 
sion, counseled frequently with TVA management, and corresponded 
and conferred at length with the editor. The editor and the publishers 
are grateful for his faithful assistance. During the preparation of the 
original lectures, Professor James A. Norton served as co-ordinator for 
the Florida State University and Mr. M. G. Forster as co-ordinator for 
the Tennessee Valley Authority. Thanks are tendered for their con- 
scientious service. 

Lee S. Greene, Director, York Willbern, Director, 

Bureau of Public Administration, Bureau of Public Administration, 
University of Tennessee. University of Alabama. 


The Authors 

JLn each of the brief biographies which follow, the 
title given is that held by the author at the time his essay was written. 
The authors are listed in the order of their appearance in the book. 

HARRY A. CURTIS, Member of the Board of Directors, joined the 
staff of the TVA in 1933. He has been intimately acquainted with the 
Tennessee Valley since World War I, when as Captain of Ordnance 
he was assigned to research duty at Muscle Shoals Nitrate Plant No. 1. 
His long and varied career includes three academic appointments (at 
Northwestern University, Yale University, and the University of Mis- 
souri), employment with several industries, and service with the fed- 
eral government on a number of occasions, all over a period of more 
than 40 years. He has held his present position since 1949. 

GORDON R. CLAPP, Chairman of the Board of Directors, became 
associated with the TVA in 1933. Serving successively as Assistant to 
the Director of Personnel, Director of Personnel, and General Man- 
ager, he was named Chairman of the Board in 1946. When his term as 
Director expired in 1954, Mr. Clapp became Deputy City Administra- 
tor of the City of New York; he is now serving as President of the De- 
velopment and Resources Corporation. 

JOSEPH C. SWIDLER, General Counsel, began work with the TVA 
in 1933 as Power Attorney. He was made General Counsel on his return 
to TVA in 1945, following service in the Navy during World War II. 
Mr. Swidler has held a number of positions in both public and private 

JOHN OLIVER, General Manager, came to the TVA in 1942 as As- 
sistant to the Chief Budget Officer. He was made General Manager in 
1951. He left the TVA in 1954 to become associated with The Whe- 
land Company, an industrial concern. 


vi The Authors 

HARRY L. CASE, Director of Personnel, joined the staff of the TVA 
in 1937 as Assistant Classification Investigator. He has served as Di- 
rector of Personnel since 1946. In 1955 he assumed the added duties 
of Assistant General Manager. 

JOHN H. CLARK, Chief Budget Officer, began his employment with 
TVA in 1938 as Junior Fiscal Accounting Clerk in the Division of 
Finance. He was named Chief Budget Officer in 1951. In 1954 Mr. 
Clark left the TVA to accept an appointment with the Ford Motor 

HARRY WIERSEMA, Assistant to the Chief Engineer, came to TVA 
in 1933 as Assistant Director of the Engineering Service Division. His 
experience before 1933 included a number of engineering assignments 
with both industry and government. 

E. P. ERICSON, Assistant Chief of the Navigation and Transportation 
Branch of the Division of Regional Studies, began his association with 
TVA in 1937 on a co-operative appointment while still an engineering 
student. He has been with the TVA since, except for a term of service 
in the Navy during World War II and a brief appointment with a 
private company. In 1954 he was made Chief of the Fuels Branch of 
the Division of Power Supply, the position he now holds. 

O. S. WESSEL, Administrative Officer in the Office of Power, joined 
the staff of TVA in 1938 as Associate Rate Analyst. He was named 
Administrative Officer in 1946. In 1954 he left the TVA to establish 
his own business. 

CLAUDE W. NASH, Manager of Properties, came to TVA in 1946 as 
an Education Officer. He was appointed to his present position in 
1947. Before coming to TVA, Mr. Nash served as teacher and admin- 
istrative officer in the public schools of Kentucky, Ohio, and Virginia. 

LELAND G. ALLBAUGH, Director of the Division of Agricultural 
Relations, assumed that position in 1952 after having left TVA follow- 
ing a brief tenure in the same division in 1946-47. Mr. Allbaugh has 
had wide experience, both domestic and foreign, as an agricultural 

J. O. ARTMAN, Staff Forester, began work with the TVA as a Junior 
Forester in 1934. He has served as a member of the staff continuously 
since that time. 

The Authors vii 

O. M. DERRYBERRY, Director of Health, became associated with 
the TVA in 1936 as an Assistant Medical Officer. He has held his pres- 
ent position since 1951. Dr. Derryberry also serves as Lecturer in the 
College of Medicine of the University of Tennessee. 

ROBERT M. HOWES, Assistant to the Director of the Division of 
Reservoir Properties, came to the TVA in 1934. Except for service in 
the Navy during World War II, he has served continuously since 1934 
as a recreation planner and specialist in reservoir property use. 

JOHN V. KRUTILLA, Economist of the Government Relations and 
Economics Staff, became connected with the TVA in 1952 as an Indus- 
trial Economist. He resigned in 1955 to accept employment with Re- 
sources for the Future, Inc. 

LAWRENCE L. DURISCH, Chief of the Government Relations and 
Economics Staff, has held a number of research and administrative 
positions with TVA since he joined the organization in 1934. He has 
served as TVA's principal representative on the staff responsible for 
the regional program of research and education in public administra- 
tion. Outside experience includes service as lecturer and visiting pro- 
fessor at several universities. 

EDWARD A. ACKERMAN, Assistant General Manager for Program 
Analysis, became associated with TVA in 1952. Before that he had had 
a varied career as professor of geography on the faculties of leading 
universities, as consulting geographer to a number of governmental 
agencies, and as public administrator. Mr. Ackerman left the TVA in 
1955 for an appointment with Resources for the Future, Inc. 

ROSCOE C. MARTIN, Editor, has been closely associated with the 
TVA intermittently since 1937, first as a member of the faculty of the 
University of Alabama interested in regional research and education 
in government, more recently (since 1949) as consultant. His present 
position is that of Professor of Political Science at Syracuse University. 


By Harry A. Curtis 

.During the first half of 1953 the Tennessee Valley 
Authority, in response to an invitation by the Florida State Univer- 
sity, assumed responsibility for a course in public administration at 
that institution. Nineteen members of the TVA staff presented a total 
of fifty lectures during the semester. The participants represented both 
management and major programs, and their lectures constituted a 
systematic analysis of the organization and operation of the TVA. 
Whatever the worth of the course to the host institution, its value to 
the guest faculty was considerable, for it afforded TVA officials the 
occasion for an inventory of their institution at an important point 
in its history. 

When those responsible for the lecture series reflected on their 
experiences at the end of the course, it appeared that the staff story 
of TVA might be worth preserving in permanent form. The lectures 
had been prepared with some care and had been reduced to writing 
at considerable cost in staff time. Each paper had been written by a 
specialist; yet there was evident throughout the series an awareness 
of TVA's general objectives and unity in purpose. True, the lectures 
as presented were not in book manuscript form; but the substance 
was sound, and it was clear that the papers might be put in order for 
publication by an editor. 

With these thoughts in mind, it was decided to proceed with plans 
for publication. An editor was selected to rearrange the substance of 
the fifty lectures into the chapters of this book. Except for this intro- 
duction and the concluding essay, the volume represents essentially a 
condensed version of the course offered in the spring of 1953. 

It is well to understand early what this book is and what it is not 
— what it attempts and what it does not attempt to do. This is a staff 
analysis of the organization and program activities of the Tennessee 
Valley Authority. Except for the conclusion, it was written for the 
most part by persons long associated with the agency; several of the 
authors, indeed, have been members of the TVA staff from its be- 
ginning in 1933. They know the TVA in intimate detail, for they 
have devoted substantial parts of their working lives to it. It must be 


x Introduction 

added that these men hold TVA in high esteem. The institution is 
what it is in considerable part because of the devotion and energy 
of these same men and their colleagues. It would be strange indeed if 
they did not think well of their handiwork. Here, therefore, is no 
impartial on-the-one-hand-but-then-again-on-the-other account of the 
Tennessee Valley Authority. Here, on the contrary, is an analysis by 
a devoted group of men who participated responsibly in the forging 
of TVA. If the body of the report, being the work of sixteen different 
authors (and they for the most part specialists) , lacks something in 
the cohesiveness which single authorship might have yielded, it may 
nevertheless reflect the strength which flows from a variety of pro- 
grams dedicated to a common goal. 

This book preserves the integrity of the lectures as they were 
delivered; that is, the account has been allowed to stand as at midyear 
1953. No effort has been made to update the material, though some 
statistical tabulations carry through 1953. This decision rested upon 
three major considerations. First, during 1953 the Tennessee Valley 
Authority celebrated its twentieth anniversary, and it seemed fitting 
to make a staff report on the first twenty years. Second, in 1953 TVA 
stood at the end of one era and the beginning of another. This was 
so without reference to the change in the national administra- 
tion which occurred at the beginning of that year, although that 
change was, of course, not without significance. Third, none of the 
developments of the last three years has necessitated any considerable 
modification in the story told by these essays. The changes have been 
important, but they have not had any fundamental effect on TVA 
organization or program. 

This book, then, is a staff report on the Tennessee Valley Au- 
thority for the years 1933-1953. The essays have not been presented 
to the Board of Directors for approval; hence, they do not constitute 
an official statement of TVA policy or practice. They are nothing 
more, and nothing less, than individual statements by men long as- 
sociated with the Tennessee Valley Authority. They delineate the 
TVA as it appears to a group of responsible public servants who must 
be reckoned as among the agency's chief architects. 


Foreword, Lee S. Greene and York Willbern iii 

The Authors v 

Introduction, Harry A. Curtis ix 

V 1. The Meaning of TVA, Gordon R. Clapp 1 


2. Legal Foundations, Joseph C. Swidler 16 

3. Administrative Foundations, John Oliver 35 

4. Personnel Administration, Harry L. Case 50 

5. Financial Administration, John H. Clark 62 


6. The River Control System, Harry Wiersema .... 77 

7. River Transportation, E. P. Ericson 95 

8. The Power Program, O. S. Wessel 108 

9. Reservoir Land Management, Claude W. Nash . . . . 137 


10. Fertilizer-Munitions and Agriculture, Leland G. 

Allbaugh 152 

11. Forestry,/. O. Artman 177 

12. Health, O. M. Derryberry 193 

13. Recreation, Robert M. Howes 206 

^4. Economic Development: an Appraisal, John V. Krutilla . 219 

* xi 

xii Contents 


. TVA and State and Local Government, Lawrence L. 

Durisch 232 

16. TVA in Its Larger Setting, Edward A. Ackerman . . . 244 

17. Retrospect and Prospect, Roscoe C. Martin 257 

Index 274 

List of Charts and Tables 

Chart I. Organization of Tennessee Valley Authority . 37 
II. TVA: The Budget Cycle 65 

III. Total Income, Manufacturing Income, and Manu- 

facturing Employment in the Tennessee Valley 
Region, 1929-1953 224 

IV. New Workers in Fast-growing Industries in the 

Tennessee Valley Region, 1939-1947. . . . 226 

V. Growth of the Valley Region's Labor Force, 

^o-^o 2 3° 

Table 1. Major Projects Constructed by the Tennessee 

Valley Authority, 1933-1953 89 

2. TVA System Power Requirements, 1945-1956 . . 125 

3. Summary Statement of Income to the TVA from 

its Power Program 129 

4. Summary Statement of Income to the Distributors 131 

5. State Park Expenditures, Personnel, and Attend- 

ance, 1941-1953 213 

6. Recreation Development and Use of TVA Lakes 

and Lake Frontage Property, 1947-1953 . . . 215 

7. Estimated Income Payments by Major Components 

in the Tennessee Valley Region 225 

8. Structure of Employment in the Tennessee Valley, 

Southeast, and United States 229 


Chapter i 

The Meaning of TVA 

By Gordon R. Clapp 

The Valley and Its People 

Ihe Tennessee valley is more than a geographical 
place name. Precisely defined, the Valley is the watershed of the 
Tennessee River. More broadly, and perhaps more usefully, many 
people include in the concept not only the watershed but an addi- 
tional sizable area served by the distributors of TVA power. In this 
sense, the Tennessee Valley region covers 201 counties; it includes 
the whole of Tennessee, and parts of Alabama, Georgia, Kentucky, 
Mississippi, North Carolina, and Virginia. The region measures some 
92,000 square miles, or about three per cent of the nation's area, is 
more than double the size of the State of Tennessee, and is half again 
as large as New England. 

The natural resources of the Valley region are not lush or ex- 
travagantly abundant, but they are adequate as a basis for a sound 
and prosperous economy. A quarter-century ago these resources were 
either seriously underdeveloped, as in the case of water and forests, 
or severely deteriorated, as in the case of soils. 

Most of the soils of the Valley are not very fertile. Only twenty 
per cent are classified as fair or better cropland. The soils, however, 
are generally responsive to management and the climate is such as to 
give the region considerable advantages over many other areas. Rain- 
fall, moderate temperature, and sunshine greatly enhance the poten- 
tial value of the soils. On the other hand, the rugged topography in 
many areas seriously limits agricultural capacity. 

More than half of the land area of the Valley is in forests. Al- 
though one of the major renewable basic resources of the area, the 
forests have been developed to no more than a fraction of what they 
can become. 

The mineral resources of the area comprise mainly some relatively 
small and heavily depleted phosphate rock deposits in middle Ten- 
nessee, coal deposits in east Tennessee and southwest Virginia (which 
have been developed either by high-cost shaft or small-scale truck 


2 Twenty Years of TVA 

mining), scattered mica deposits in western North Carolina, marble 
and other types of stone, and a wide variety of other minerals which 
are of low quality and in small deposits. The petroleum and natural 
gas resources of Mississippi, Kentucky, and Virginia are, with a few 
minor exceptions, outside the Valley region. 

In 1950 the population of the area using TVA power totaled just 
under 6 million (5,912,000) or 3.9 per cent of the nation's total. Sixty- 
five per cent of the people were classified as rural, as compared with 
36 per cent for the country as a whole. Population density averaged 
about 60 persons to the square mile as compared with a national 
average of 51 persons per square mile. Reproduction rates in the 
Valley's population run high in relation to the rates for the United 
States. Over the decade 1940-50, the natural increase of population 
in the Valley (excess of births over deaths) equaled 20 per cent 
of the total 1940 population as compared with 14 per cent for 
the nation. Against the physical background depicted above, these 
population characteristics suggest a problem of population pressure 
in the area. 

Twenty-five years ago, the Tennessee Valley was a very low income 
area. In the prosperity year of 1929, the Valley region, with 4.1 per 
cent of the nation's population, received only 1.8 per cent of the 
nation's personal income. Thus average per capita income in the 
Valley was only 44 per cent of the national average, $301 as compared 
with $680 for the nation. In the depression year of 1933 the Valley's 
income position was about the same as in 1929, although income in 
both the nation and the Valley was at a much lower level. 

Agriculture in the Valley region predominated both as a source of 
income and in employment. Agriculture accounted for about half of 
total employment and provided about 20 per cent of the total 
regional income. Income per farm worker in the Valley was only 60 
per cent of the national average. Compared with the nation as a whole, 
the Valley had proportionally a greater number of persons in agri- 
culture and these received comparatively quite low returns from their 

Thus two decades ago, the Valley presented a fairly typical picture 
of an economically underdeveloped area. Underemployment in agri- 
culture, a low level of agricultural productivity, and a critical need 
for industrialization to make fuller use of both the natural and labor 
resources of the area were the marks of a depressed region — a chal- 
lenge to aggressive development. But in the environment of a world 
depression and a vast amount of idle manufacturing capacity through- 

The Meaning of TVA 3 

out the nation, the prospects for industrial expansion in the Tennessee 
Valley were far from promising. 

The Tennessee Valley Authority: an Introduction 

The story of the TVA begins with a river, a river lan- 
guid in one season but wild and destructive in another. In its untamed 
state it was an extraordinarily erratic stream with wide variations 
between minimum and maximum flows during the year. Floods were 
followed by periods when navigation was hazardous or confined to 
short hauls. The temperamental behavior of the Tennessee had been 
recognized as early as 1824, an( ^ from that year on intermittent pro- 
posals were made to bring the stream under some measure of control. 
It was perhaps inevitable that the national interest in the river should 
one day find responsible expression. This it did when, in 1933, the 
Congress passed the Tennessee Valley Authority Act. 

Many factors influenced the choice of the Tennessee Valley as the 
location for what was frankly an experimental program in regional 
development. First, as has been stated, the Tennessee Valley in 1933 
was an area of economic need. In one county 87 per cent of all families 
were receiving relief payments, and 50 per cent on relief was not un- 
common in others. Second, while the people of the Tennessee Valley 
area were economically depressed in the fullest sense of the term, they 
had by no means reached a state of hopelessness concerning their 
problems. They were ready to accept leadership, or to rally their own 
leadership behind a specific program that promised to meet some of 
their economic problems. The nation was in a mood to experiment. 
The region was willing to participate in any program that promised 
relief from an intolerable situation. These conditions provided the 
social and economic climate for the TVA program. Other factors 
present included capital in the form of very necessary federal spend- 
ing in a period of economic depression; labor from among the un- 
employed, including the necessary engineering and other technical 
skills; and a rather complete analysis of the developmental possibili- 
ties of the river which had been prepared over a period of years by 
the United States Corps of Engineers. 

A consideration of special significance turned on the properties 
which the federal government had constructed at Muscle Shoals, 
Alabama. For fifteen years Congress had debated the disposal of two 
nitrate plants and a dam on the Tennessee River, begun under the 
provisions of the National Defense Act of 1916, but not finished in 

4 Twenty Years of TVA 

time to help meet the need for munitions in World War I. President 
Franklin D. Roosevelt's now famous message to the Congress regard- 
ing the establishment of a regional agency proposed the federal opera- 
tion of these properties — a program which twice previously, in 1928 
and 1930, had been approved by the Congress only to encounter 
presidential veto. The proposal in its accepted form was for operation 
of the Muscle Shoals plants as part of a broad program of regional 

Finally, the occurrence of a disastrous flood on the lower Missis- 
sippi in 1927 did much to establish and emphasize flood control as a 
continuing responsibility of the federal government. Moreover, by 
1933 the idea that reservoirs and other control measures on the tribu- 
taries, as opposed to downstream levees, were necessary to effective 
reduction of flood heights on main streams had gained ground. 

An unusual combination of circumstances thus led the federal 
government to launch the TVA in 1933. Both time and place have 
contributed to the shaping of administrative organization and method 
as well as to program activities. 

Among the many characteristic features of the TVA to be de- 
veloped by the essays which follow, three are worthy of special note 
here in the beginningAFirst, the Authority, though federal in origin 
and in legal authorization, is essentially a regional agency. Since the 
term "region" has received neither legal nor precise cultural or geo- 
graphical definition, the concept is by no means clear-cut. This is one 
of several reasons why the position of the TVA as a regional organiza- 
tion is not always readily understood. It is sufficient for present pur- 
poses to observe that the Tennessee Valley Authority confines its 
operations generally to the watershed of the Tennessee River. Its 
geographical limits thus are not precisely defined, though no serious 
jurisdictional difficulties have arisen from its inexact boundaries. 

In the structure of governmental relations the TVA occupies a 
place midway between the national government and the states; and 
from this position its responsibilities of necessity run both ways, and 
at the same time. Frequently, it has to remind the people of the 
Valley that the TVA has a national responsibility. When it produces 
fertilizers at Muscle Shoals, it could help the Tennessee Valley achieve 
a greater measure of soil fertility, and more quickly, if it confined dis- 
tribution to the Valley. But under the law, it is admonished to help 
farmers; and the TVA Act does not limit this assignment to the 
farmers of the Tennessee Valley. TVA is instructed to help farmers 
find more effective fertilizers and learn to use them more efficiently. 

The Meaning of TVA 5 

TVA must, therefore, look upon the nation as a schoolroom in which 
this lesson may be taught and learned. 

At the same time, TVA often finds itself explaining to New Eng- 
land, for example, the peculiar potentiality for development in the 
Tennessee Valley. Some in New England maintain that the TVA 
should not build steam plants because a greater abundance of elec- 
tricity in the Tennessee Valley will lure industry away from New Eng- 
land. TVA points out that it does not lure industry away from New 
England; that it does encourage the development of industry in the 
Tennessee Valley and must continue to do so; that its experience is 
available for study by New Englanders interested in revivifying the 
industrial strength of that region. Here TVA speaks as a representa- 
tive of the region. 

In terms of relations with other levels of government, then, it may 
be argued that TVA is neither regional nor national, but both. 
Situated in a regional center and charged with regional responsibili- 
ties, it must nevertheless always keep in mind the national along with 
the regional interest. Its central concern is to relate the strength of 
the region to the strength of the nation and carry on its work to 
enhance both. Fortunately, this requires very few compromises, if 
problems are analyzed objectively, because a Valley stronger by virtue 
of better use of its native resources upsets very little outside the region 
and adds to the strength of the whole country. 

A second special feature of the TVA relates to its responsibility 
for the development and optimum utilization of natural resources. As 
has been observed, the Valley, though not rich in resources, has al- 
ways had a reasonable base for development. It has had a favorable 
growing season, abundant rainfall, striking scenic attractions, coal and 
some other minerals, potentially productive soils, and forests capable 
of sustained yield development. No single resource was outstanding, 
but taken together they presented a challenging if latent opportunity. 

What the Tennessee Valley lacked was institutional machinery to 
plan, co-ordinate, and encourage the development of its natural re- 
sources. These resources were the object of the attention of not less 
than half a dozen active and widely experienced federal agencies, 
while seven states, hundreds of municipalities, and some two hundred 
counties likewise were concerned in greater or less degree. But no one 
agency or unit of government assumed or was equipped for a responsi- 
bility to see the region as a whole or to think of its various special 
problems as related parts. No agency of government had been charged 
with responsibility for total resources development on a regional 

6 Twenty Years of TVA 

basis. The Tennessee Valley Authority was created to fill this void. 

The TVA, then, is a federal agency whose concern is for the 
balanced development of natural resources on a regional basis: it is 
in some sense a regional department of natural resources. If it is with- 
out organizational prototype, this is in part because the administrative 
structure for resource management can never remain static but must 
be continuously and readily adaptable to changing conditions. There 
is a basic reason for this: the resource situation itself is constantly 
changing, constantly being modified as new needs and new opportuni- 
ties appear. Resources do not just exist; they become resources. It is 
only when people learn how to use atomic energy that the atom be- 
comes a usable unit — a resource. A concern for natural resources is 
therefore a concern for the process of use; resources are not necessarily 
a classification of natural things but are more likely to relate to an 
action process which is certain to involve changing administrative 
action, to give rise to new approaches, and occasionally to require 
new structural arrangements for governmental action. The Atomic 
Energy Commission came into existence to deal with something that 
twenty years ago was not recognized as a resource. As a result of 
discovering how to use the atom a new agency appeared on the 
federal organization chart. Precisely so the Tennessee Valley Author- 
ity appeared in 1933, though the stimulus which produced it was less 
dramatic. The TVA resulted from a new concept in the administra- 
tion of natural resources, a concept which required the planned and 
co-ordinated development of all the resources of a region in concert. 

Yet a third distinguishing feature of the TVA reflects the agency's 
preoccupation with energy. Energy is the primary basis for greater 
economic activity from which derives with more efficiency a higher 
material standard of living. It is generally agreed that an agricultural 
economy is less productive in this sense than an industrial economy. 
The difference is largely in the efficiency with which sources of energy 
are applied to organize the things which people demand to achieve a 
higher standard of living. This is the theme in TVA that ties river 
and land together. It brings people and their agencies and their 
capital together in a gigantic effort to stop the economic retrogression 
of a whole region. It seeks to turn the march about face and to move 
on to a higher standard of living. Changing the river from a dangerous 
and virtually useless stream, ranging from a trickle of water to heavy 
floods, into a well-ordered and controlled flow that can provide year- 
round navigation and produce large quantities of hydroelectricity is 
of course at the bottom of the whole TVA organization of energy re- 
sources in the region. 

The Meaning of TVA 7 

It is, however, by no means the only aspect of TVA operations 
concerned with the organization and release of energy. On the con- 
trary, every phase of the Authority's program relates directly or in- 
directly to the marshaling of energy. This is so, for example, of the 
fertilizer program, whose peacetime objective is to improve the man- 
agement of land and help to increase agricultural production not 
only in the Valley but throughout the nation and so to release hitherto 
unused energy. It is so, too, of TVA's efforts to improve navigation 
on the river, which have found reflection in a very material strength- 
ening of the region's transportation system. It is so of the forestry 
program, whose purpose is to bring forests to their full yield of energy 
by increasing the production and use of trees to the maximum. It is 
so, finally, of the Authority's program of personnel administration, 
which is designed to elicit the utmost energy from every individual 
employee and from the work force as a whole. 

The Tennessee Valley Authority is engaged in the organization of 
energy on a grand scale, for its mission embraces nothing less than the 
unified development of all the natural resources of the region. This 
development, however, is not the ultimate goal; the goal is a con- 
stantly improving standard of living for the people of the Valley, 
which in turn will enhance the wealth and living of the nation. Re- 
sources development and economic development are, of course, but 
opposite sides of the same coin, and both are utterly dependent upon 
the massive organization and release of energy to which the TVA has 
set itself in its Valley. 

TVA's Workways 

The mission of the TVA clearly lacks nothing in ambi- 
tion. Moreover, that mission, and the manner of organizing for its 
accomplishment as well, are without precedent in American adminis- 
trative experience. It would be cause for surprise if the procedures 
and methods of work adopted by the Authority were not somewhat out 
of the ordinary. 

The first significant workway arises from a fundamental principle 
in TVA's philosophy, which emphasizes a multipurpose approach to 
control and use of the river. Rivers have been controlled for many 
centuries through the efforts of engineers, as the remnants of ancient 
works in other lands reveal. The Tennessee posed many of the prob- 
lems which had confronted the engineers of 3,000 years ago on the 
Tigris and the Euphrates, but the latter-day solutions were quite dif- 
ferent from those applied in Mesopotamia. For in the Tennessee 

8 Twenty Years of TVA 

Valley this country was prepared, for the first time in any land, to 
build in a river a multipurpose system of structures designed to ac- 
complish more than one thing. 

There had been dams to control floods before the TVA. There 
had been dams to produce power. There had been dams to make a 
river navigable with a fairly constant minimum depth for the draft 
of vessels. But TVA represented the first attempt on any sizable scale 
to apply the theories of multiple-purpose engineering to a whole river 
system. Here were combined in single structures the multiple purposes 
of providing navigation, controlling floods, and storing sufficient water 
during the in-between seasons to make the production of power a 
profitable undertaking. 

There is much talk these days about upstream storage and up- 
stream control of water, and a controversy currently rages on the sub- 
ject between two rather extreme schools of thought. One holds that 
the only way to control water effectively to prevent floods is to go 
back on the hillsides and plant the land to close-growing cover crops, 
trees or clover and other legumes, which have complex root systems. 
Such crops would increase the water-holding capacity of the land and 
so reduce the runoff that takes place when there is heavy rainfall. By 
these means, they say, big dams to control floods would be unnecessary. 
The other school maintains that such efforts are useless or worse and 
can result in a great waste of money and time and misdirection of 
effort. Its partisans contend that the only way to control floods is to 
build large dams in the river. The TVA holds firmly that big dams, 
capable of storing tremendous quantities of water behind them, are 
necessary to control floods in streams that go on flood rampages during 
heavy rainfall seasons. The TVA also subscribes to the view that this 
is not enough, that, in addition, measures must be adopted to achieve 
a more efficient use of water on the land, which in turn will reduce 
the runoff and thus create fewer floods on the smaller streams. 

In an important sense, TVA constitutes a demonstration which 
brings to useful climax a long history of engineering education, theory, 
and experience in the pursuit of many purposes which encompass 
engineering objectives. The basic concern is to make the river system 
an important element in the economic development of the Tennessee 
Valley. The Authority's engineers, by submerging traditional profes- 
sional preconceptions and embracing the multiple-purpose principle, 
have contributed signally to that goal. 

It has been observed that the TVA is a regional agency. It is 
necessary now to note that there is no formal place for such an agency 
in the American structure of government. The federal system, often 

The Meaning of TVA 9 

remarked as one of this country's major contributions to the science 
of government, rests upon an intricate congeries of relationships be- 
tween the national government and the states; but nowhere does the 
concept of a regional agency, as a legally constituted branch of the 
government, find a place. 

The TVA finds its legal foundation in a federal statute, with 
national authorization and national accountability. At the same time 
its responsibilities, centered as they are on the Tennessee Valley, bring 
it into direct and immediate contact with the hundreds of established 
governments in the region. The TVA's responsibilities, however, do 
not in any way supersede those of the state and local governments in 
their respective areas. These governments have precisely the same 
legal rights and duties since 1933 as they had before, with TVA re- 
sponsibilities simply superimposed on those of existing governments. 

The most interesting thing about this arrangement, and the most 
significant for TVA's method of operation, is that the Authority has 
no coercive power whatever with regard to the long-established gov- 
ernments of the region. In fact, TVA has chosen almost uniformly to 
work through existing governments instead of through its own organi- 
zation in discharging its manifold responsibilities. This policy has 
brought it into close relations with governments over which it has 
no control, and thus has placed a high premium on the ability to 
negotiate agreement and to enlist voluntary co-operation. TVA spokes- 
men may entreat, cajole, and argue, but they may not threaten and 
they may not order, for the very good reason that in the end they 
do not have the power of sanction. It follows that a good share of 
government in the Tennessee Valley is carried on through what may 
be called a system of co-operative administration. 

This system of administration finds its base in a complex network 
of agreements bringing into association all kinds of units, agencies, 
and groups. Many of these signatories are public — states, cities, coun- 
ties, the United States Forest Service, the Fish and Wildlife Service, 
the Tennessee Valley Authority — but many are private organizations 
such as farm co-operatives. Through agreement duly negotiated and 
signed, agency A and agency B may conclude to join hands in pursuit 
of a certain program; subsequently, agency C may be brought in as 
a party to the original compact, and agencies D and E may come in 
for a portion of the program of special or local interest. In net result, 
these hundreds of agreements add up to a complex system of collabo- 
rative administration which exists outside the formal structure of 

The TVA lays no claim to recognition as father of this idea, 

io Twenty Years of TVA 

though it does draw considerable satisfaction from having participated 
actively in its development. It draws satisfaction also from the fact 
that effective channels have been discovered for enlisting in TVA 
programs the active co-operation of governments over which the Au- 
thority has no coercive power. The lessons of co-operative administra- 
tion in the Tennessee Valley may be especially significant in these 
times of renewed public discussion of states' rights and federal-state 
relations. The TVA, a distinctly American creation, may yet be found 
to have pointed a middle course for those who would avoid the ex- 
tremes of the apoplexy of centralization and the anarchy of disunion. 

It follows from what has gone before that the TVA must be active 
in the field of planning, that, indeed, in an important sense it is 
basically a planning agency. But not "planning" as the imposition by 
higher authority of a set of plans or blueprints upon lesser beings, 
to be followed like a military order. TVA sees "planning" as a process 
for finding agreement on the best and most feasible goals that many 
minds in many private and public organizations can discover by 
counseling together. The enlistment of the energies of hundreds of 
units and agencies, public and private, in support of a broad program 
of resource development did not come about by accident, but on the 
contrary required careful nurturing at every stage. This whole process 
rests upon detailed definitions of program ends, identification of units 
qualified by experience and interest to participate, and step-by-step 
agreement on means and procedures. This foots up to planning in the 
best and truest sense. 

Planning is a much abused word. Those who think of public 
planning are inclined to suppose that, as government plans, it makes 
very neat and precise projections of future action. This can be true 
with respect to material things. For example, when TVA plans a dam 
it is very particular about details. The dam must be built in a certain 
place, not just any place, and that certain place must be discovered 
with great care. The dam must be planned with precision. The en- 
gineers must know how high it is to be and why it is to be that high. 
They must also know on which side of the river the powerhouse is 
to be, on which side the lock is to be, how high the lock is, how 
wide and how long, and how fast it can fill and raise a boat from 
one level of the river to the next. When a dam is finished, all the 
rubble and earthfill and excess machinery and equipment are carted 
away. Seeding and landscaping proceed, the paint is taken off the 
windows, aluminum rails are polished down. Give nature a year and 
the dam will seem to have been there forever, so well will it fit into 
the landscape. Planning with respect to things can be very neat and 
precise, and a considered, preconceived effect can be achieved. 

The Meaning of TVA 11 

But the world also has people in it, and planning with respect 
to the actions of people is quite a different thing from physical plan- 
ning. There plans must be loose and flexible, and neatness and preci- 
sion frequently become a curse. Social and economic planning — a 
dread term in some quarters — which means nothing more than plan- 
ning with respect to people and which is as old as co-operation 
among humankind, must rest upon mutual consent and voluntary co- 
operation if it is to achieve results in action. Thus visualized, plan- 
ning becomes a process by which people agree upon objectives and 
upon means to attain those objectives. The process becomes, in many 
respects, more important than the objectives; here surely the ends 
must not be allowed to overshadow the means, for the means are 
indistinguishable from the processes of democracy itself. 

Important segments of the TVA program lend themselves to ex- 
ecution by Authority personnel. Here legal power exists for direction 
and control, though here also democratic planning is practiced. Many 
basic elements, however, require adoption, continuing positive sup- 
port, and active participation by the total machinery of government 
in the Valley. The TVA idea will not prevail in the end unless it 
commands the loyalty of the established agencies of government. Such 
acceptance, such support, such participation, such loyalty must be 
earned over the years, for it cannot be manufactured artificially. 

Two kinds of engineering problems confront the TVA. With re- 
gard to dams, steam plants, and other like structures its problems 
relate to engineering in the traditional sense, to what has been termed 
here physical planning. With respect to public support and confidence 
likewise the TVA is engaged in engineering, in social engineering as 
it has been called. Here planning for people, or more accurately, as 
practiced in the Valley, planning with people, is paramount. It is 
wholly likely that, in the long run, the social engineering processes 
which brought the TVA program into the aspirations and actions of 
the people of the Valley will prove more important than the physical 
engineering structures the TVA built so efficiently. The dams are more 
spectacular, but the ideas may be more enduring. 

TVA as an Illuminator of Issues 

There are several important public issues with regard 
to which the recorded experience of TVA serves to clarify and illumi- 
nate the crux of encrusted dispute and disagreement. Some of these 
issues relate directly to the TVA and its manner of operation; others 
concern national problems in which local and even regional interests 
are incidental. Among the latter, there is the issue of centralization 

12 Twenty Years of TVA 

versus decentralization. The TVA, as an organization created by fed- 
eral statute, appears to some at a superficial first glance to represent a 
substantial additional step in the direction of increased control by 
Washington. Certainly the TVA Act points clearly and explicitly in 
the opposite direction. For the TVA in truth has contributed added 
strength to both the states and the local governments of the region 
through its method of co-operative administration. The TVA method 
of collaboration has resulted actually in devolving upon the states and 
their subdivisions responsibilities for many federally authorized activ- 
ities not previously within their province. There is thus good reason 
for arguing that the Authority has strengthened the federal system, 
since the national government is not weaker in the Tennessee Valley 
than elsewhere and the state and local governments there demon- 
strably are more vigorous in pursuing broader objectives because of 
TVA activity. But whatever the merits of this argument, those who are 
concerned about the trend of power in this country will learn much 
from the example of the Tennessee Valley Authority. 

A companion issue turns on uniformity versus diversity. As central 
agencies increase in size, scope of authority, complexity, and influence, 
there is a temptation for the administrators to seek to make their 
tasks simpler by insisting upon more uniform administration of the 
programs for which they are responsible. The administrator wants 
things to go according to the book; the official manual becomes the 
law of the Medes and the Persians. This tends to be true of all large 
organizations, whether public or private. TVA interrupts the quest 
for uniformity among agencies of the federal government and irritates 
them in the process by introducing variety — variety in organizational 
structure, in procedures and methods, in relations with other agencies 
of government. A basic reason for its championing of diversity arises 
from the conviction that it must encourage regional development in 
harmony with the characteristics of the Tennessee Valley. Its program 
cannot be assumed to suit the needs of the valleys of the St. Lawrence, 
the Columbia, or the Missouri. Those valleys undoubtedly can learn 
much from the TVA example, but programs for their development 
must be tailored to their needs, their resources, and the genius of 
their people. The conviction that a program for river valley develop- 
ment is a special and individual thing has put TVA on the side of 
diversity from the beginning. It has not been afraid to try new things, 
and its experiments hold many lessons for those concerned about the 
balance between uniformity and variety. 

In reference once more to TVA's regional character, it is worth 
while to note the issue of regionalism versus sectionalism. The latter 

The Meaning of TVA 13 

rests upon the accidents of history or geography, on tradition, and on 
carefully nurtured local prejudices and patriotisms. Its characteristic 
feature is a spirit of competition which pits one section against an- 
other, as New England against the South, or even one section, as the 
South of other days, against the nation. Regionalism, by contrast, 
builds upon regional strengths; its preoccupation is less with the past 
than with the present and the future, less with tradition than with 
the resources at hand, less with ideological concepts than with the 
standard of living of the people. It seeks to build a strong regional 
economy in a strong national economy, recognizing that no part of the 
country can prosper for long unless the whole prospers. TVA recog- 
nizes sectionalism as a historical fact, but it has committed its full 
energies and resources to the cause of regionalism. Its history has 
many lessons for those interested in this emerging subject. 

Yet another issue to whose resolution the TVA experience can 
make a contribution is that of integration versus separatism. The 
ever-increasing specialization which characterizes modern life, neces- 
sary as it is to effective functioning in a technological age, tends to 
divide society into competing and sometime warring factions and to 
break down the cohesiveness necessary to purposeful pursuit of im- 
portant goals. The Tennessee Valley Authority, while recognizing the 
basic importance of the work of the specialists, insists upon an inte- 
grated approach to the problems with which it deals. The results of 
this insistence may be seen, for example, in the fields of engineering, 
forestry, and agriculture, where experiments and demonstrations and 
plans are shaped in harmony with the whole program of the Au- 
thority. The entire TVA effort, indeed, centers in a procedure for 
applying specialized training and competence to problems which are 
broader than any particular specialty in their significance. Through 
the management of TVA, engineers, foresters, agronomists, and a 
great variety of other specialists contribute to an over-all program 
which is broader and deeper than that of any one professional group. 

On the technical side, TVA's experience yields many lessons. Men- 
tion has been made of the concept of multiple-purpose engineering, 
in which field TVA was a pioneer. Special note should be made of 
the Authority's method of flood control, which combines erosion con- 
trol on the hillsides with big-dam storage reservoirs. The story of the 
rebirth of river traffic under TVA's careful guidance likewise is note- 
worthy. The method of distribution of electricity in the Valley region 
is unique, as is the rate structure applied to the electricity which TVA 
produces and sells. These are but random illustrations of the many 
technical areas on which TVA experience sheds illumination. 

14 Twenty Years of TVA 

From yet another point of view the example of the Tennessee 
Valley Authority contains much of interest for the perennial issue of 
public versus private enterprise, expressed variously as government 
versus business, socialism versus free enterprise, a foreign system versus 
The American Way, and so on. TVA summarily rejects any such hard- 
and-fast dichotomy as is suggested by these and like terms, which it 
regards as catch phrases designed to serve special ends and obscure the 
public interest. Most especially it rejects with all vigor the public 
versus private concept, holding that the full development of the 
United States requires the intelligent and energetic co-operation of 
government and business. Thus, the TVA, though a public body, 
has given every encouragement to private enterprise in the region, 
even to the point of opposing government action on occasion. It has 
sought to achieve a working partnership between government and 
business in the Valley. The Tennessee Valley's recorded experience is 
significantly relevant to the controversy surrounding the relations be- 
tween government and business. Public development and private en- 
terprise in truth are interdependent. A modicum of wisdom and rea- 
sonable self-restraint upon greed are the minimum essentials if we are 
to escape the traps of opposing doctrinaires who confuse this issue. 

Finally, the history of the TVA illuminates the whole subject of 
natural resources. The Authority's basic principles with regard to this 
field may be summarized in brief terms. First, resources must be looked 
at whole, not piecemeal. The approach to resources development 
therefore should strive for integrated decisions and actions. Second, 
a regional emphasis, defined in the case of TVA in terms of a river 
basin, offers more promise of fruitful results than one cast in the 
more traditional mold of nationwide, specialized, and centralized fed- 
eral agencies. Third, conservation alone is not enough: what is sought 
is not merely the preservation of natural resources, but their optimum 
utilization for the improvement of the well-being of the people. TVA's 
program therefore is a positive one, with little of the repressive spirit 
which sometimes characterized the conservation movement in its early 
days. The Tennessee Valley Authority symbolizes a more positive, a 
more dynamic, a more inclusive concept of resources administration 
than prevailed prior to 1933. Its experience contains much of value 
in reference to our rapidly developing body of theory and practice in 
the field of natural resources. 

It goes without saying that the Tennessee Valley Authority means 
different things to different people. The farmers of the Valley think 
of the TVA in terms of fertilizer and demonstrations in improved 
methods of farming, of cheap electricity where there was none before 

The Meaning of TVA 15 

even at a cost beyond their reach, of milking machines and milk- 
cooling apparatus. The wood products industries of the region both 
participate in and draw benefits from TVA's advanced forest manage- 
ment practice, and are inclined to emphasize the forestry aspects of 
the Authority's program. Sportsmen flock in increasing thousands to 
the "Great Lakes of the South" where at the initiative of states, coun- 
ties, towns, and private developers they find facilities for fishing, boat- 
ing, and camping which were not there twenty years ago. The gov- 
ernments of the region look upon the TVA as a ready and convenient 
source of technical assistance, to employ a phrase which has gained 
general currency in recent years. Not to all, however, does the TVA 
present so benign a visage, for there are those — few within the region, 
to be sure — who consider it unwarranted and unnecessary, or worse. 
Those responsibly involved like to regard the TVA as a method 
of thinking about regional problems, of organizing for regional ac- 
tion, of making government more accessible to people and of bringing 
the people into a more vital association with their government, of 
enlisting the energies of all in the processes of planning and govern- 
ing for the welfare of the greater number. To these, the Tennessee 
Valley Authority stands as a twenty-year demonstration in the demo- 
cratic administration of the resources of a region. This is the basic 
orientation of the essays which follow. 

Chapter 2 
Legal Foundations 

By Joseph C. Swidler 

Ihe background of TVA rests upon the early interest 
of the federal government in internal improvements. In the first days 
of the republic, much debate developed as to the advisability of the 
federal government's fostering internal improvements. That debate 
was characterized by lack of clarity as to the functions of the federal 
government, especially in the development of rivers. It was not until 
the case of Gibbons v. Ogden [22 U. S. (9 Wheat.) 1 (1824)], tnat 
federal responsibility in this field became clear. In that case (1824), 
the Supreme Court of the United States upset an attempt by the 
State of New York to establish a steamboat monopoly on the Hudson 
River, and held that the development of navigation was a federal 
function which the states could not limit. That decision was followed 
in the same year by the first internal improvement bill, which in- 
cluded a grant of 400,000 acres of land to the State of Alabama to aid 
that state in improving navigation on the Tennessee River by under- 
taking certain developments at Muscle Shoals. 

During the nineteenth century several locks and canals for shallow- 
draft navigation were built on the Tennessee River in the various 
states, largely through federal aid. These early federal appropriations 
were for navigation alone; it was not until 1890 that the interests of 
the federal government were broadened by Congress to include pro- 
vision to alleviate the effects of floods on river commerce. Indeed, the 
first real flood control act was not passed until 1916, following a dis- 
astrous flood on the Mississippi River. 

The Muscle Shoals site on the Tennessee River was a barrier to 
navigation on what was, in the nineteenth century, a principal ave- 
nue of commerce from East to West, from the settled east coast to the 
pioneer region. The river in this area had a fall of 100 feet or more 
in the course of a very few miles; this condition, because of swiftness, 
turbulence, and shoals, made navigation all but impossible notwith- 
standing the shallow-draft canal which had been built around part of 


Legal Foundations 17 

the shoals. But the river fall created an important head of water, and 
as soon as the possibility of profitable development of hydroelectric 
power became apparent, various promoters and power companies be- 
came interested in getting control of the site, which, already excellent 
in the then condition of the river, would have an enormously in- 
creased value once the flow of the river was regulated by upstream 

The first franchise for hydroelectric development of this site was 
granted by Congress in 1899 to the Muscle Shoals Power Corporation, 
but no construction was undertaken by the corporation and the fran- 
chise lapsed. In 1903 Congress passed another bill granting the Muscle 
Shoals site to another group. This bill was vetoed by Theodore Roose- 
velt in what was the first veto of a water power franchise. This action 
raised questions whether licenses ought to be given for nothing to 
promoters who asked for them, whether rivers ought to be developed 
in such a way that the promoters reaped the profit, or whether there 
was a better way of doing it. With this veto begins the history of na- 
tional efforts to develop considered plans to make the most of our 

When in 1906, Congress passed a blanket bill granting to anybody 
approved by the State of Alabama the right to use the Muscle Shoals 
site for power purposes, this act was approved by President Theodore 
Roosevelt. He was persuaded to approve by Secretary of War Taft, 
to whom was referred the question of distinguishing this situation 
from that in which the veto was applied. Taft convinced the President 
that there was no good ground for a veto — that there would be no 
subsidy by the federal government because no navigation improve- 
ment would be required as a result of any dam. But again no con- 
struction was undertaken. If these early proposed projects had been 
constructed, they might have barred the improvement of the river, 
possibly forever. They would probably have prevented any plan for 
the co-ordinated development of the whole river system. 

After the rights granted by the 1906 bill had expired, many efforts 
were made to get licenses coupled with government grants. The rights 
granted under the earlier bills had not been exercised for the reason 
that the promoters came to believe that they could get the federal 
government to carry part of the cost as a charge to navigation. For 
the next ten years, the efforts of promoters were all in the direction 
of attempting to get a license plus a grant which would place on the 
federal government a large part of the project cost. All were un- 

Through this period, and particularly during the decade beginning 

18 Twenty Years of TVA 

about 1916, the development of the Muscle Shoals site was involved 
in and complicated by the fertilizer question. Promoters had conceived 
the idea that the Shoals would be an ideal spot to develop a great 
nitrate industry. At that time the United States was almost wholly 
dependent for its nitrates on the natural deposits in Chile. The farm- 
ers were at the mercy of a foreign cartel for their fertilizer, and they 
believed prices were far too high. The dissatisfaction was particularly 
strong in the South, where nitrogen was essential to make a good 
cotton crop. A demand arose that the federal government do some- 
thing to bring down the cost of nitrogen. The outbreak of World 
War I brought new support for such demands since nitrates are an 
essential element of explosives. In addition to the price problem, 
Germany's successful submarine warfare created apprehension as to 
the dependability of the Chilean source of supply. 

In 1916 the two outstanding processes for producing nitrates were 
the cyanamide process developed in Germany and requiring large 
amounts of electrical power, and the synthetic ammonia process, a 
more recent and very promising German development requiring rela- 
tively little electric energy. The technology of the cyanamide process 
was already well understood in this country, but the synthetic ammo- 
nia process had not been developed on a commercial scale outside of 
Germany and its technology was not familiar to American industry. 
An assured domestic supply dictated the use of the cyanamide process, 
whereas long-term economic considerations required an effort to sur- 
mount the technological problems involved in introducing the syn- 
thetic ammonia process. 

These factors crystallized in Section 124 of the National Defense 
Act of 1916. The agricultural interests, which wanted to develop a 
domestic source of nitrogen fertilizer, and the national defense in- 
terests, which wanted a domestic source of nitrates for explosives, 
teamed up to insert in that act a provision authorizing the President 
to withdraw certain hydro power sites for public development to be 
used in connection with plants to be established to produce nitrates. 
Although Muscle Shoals was not mentioned in the bill, or in Section 
124 of the National Defense Act of 1916, it was generally understood 
that what really was involved was the control of the Muscle Shoals 
site. The act was passed, and after some investigation President Wil- 
son did select Muscle Shoals as the site. 

Two nitrate plants were constructed there, one an experimental 
plant using the imperfectly understood synthetic ammonia process, the 
other and larger using the cyanamide process. Neither plant was com- 
pleted in time to produce nitrates for munitions for World War I. 

Legal Foundations 19 

Indeed it was doubtful whether the equipment employed in Plant 
No. 1 using the synthetic ammonia process would work. Construction 
was also begun on a dam to produce electric power to run the plants. 
It, too, was not completed at the time of the armistice. Seventeen mil- 
lion dollars had been invested in the dam by the end of the war, but 
there was much yet to be done. 

Proposals To Buy or Lease the Muscle Shoals 

Then began one of the most interesting phases in the 
background history of TVA, the series of offers to buy or lease the 
Muscle Shoals properties. To Congress the properties were a white 
elephant. Again and again offers were solicited from private industry 
to buy the fertilizer plants, the two steam plants at the Shoals, the 
Wilson Dam as far as it had been completed, and everything else that 
had been built there, to get it out of the government's and into private 
hands. At first, the power companies were coy, but a whole series of 
private offers were precipitated when Henry Ford made his famous 
proposal. These offers provide an interesting case history in the field 
of government property disposal. 

At the time of the Ford bid in 1921, $17,000,000 or $18,000,000 
had been invested in the Wilson Dam and about $90,000,000 in the 
other properties. The properties included two nitrate plants, two 
steam plants (one at some distance from Wilson Dam), a very large 
quarry, and four villages with 350 modern, well-built houses. There 
were utilities, roads, forty to fifty miles of railroad track, and enough 
engines and cars for a small railroad. Miscellaneous and readily 
salable personal property, such as lumber, doors, and windows, reached 
a value of $2,000,000. Thousands of acres of land were comprised in 
the property. One little item included in these properties was $735,000 
in platinum, which was used as a catalyst in the process employed at 
Nitrate Plant No. 2. Ford's offer was $5,000,000 for the nitrate and 
related properties which had cost $90,000,000. These properties were 
to be sold to Ford outright. 

In addition Ford offered to complete Wilson and Wheeler Dams 
with his own forces but at government expense and thereafter to lease 
the dams from the government for a period of a hundred years. Under 
the proposed lease Ford would make certain annual payments over the 
lease period, the greatest part of these consisting of a "rental" based 
on a certain percentage of the cost of the dams less the $17,000,000 
expended by the government during the war period. Later analysis 

20 Twenty Years of TVA 

indicated that maximum present value of the Ford offer — that is, the 
total of Ford's future payments discounted to a lump sum which at 
four per cent interest would produce those payments — was about one- 
half of the total power investment by the government which the Ford 
arrangement would have required. He offered no compensation for 
headwater improvements which the federal government might make 
through storage dams. He agreed to produce fertilizer but only "ac- 
cording to demand at a limited rate of profit of eight per cent." In 
sum, he really promised little except that he would accept these prop- 
erties virtually as a gift. 

Nevertheless the offer was warmly received in many quarters and 
came close to acceptance. Those who have visited the area know that 
in the general enthusiasm many subdivisions were laid out at Muscle 
Shoals. They ran for miles out into the cotton fields, complete with 
streets, utilities, and other improvements, on the assumption that the 
Wilson Dam area was destined to become the center of a great in- 
dustrial empire. But after much debate Congress rejected the offer. 

Another offer was that of the Alabama Power Company, made in 
1922. Alabama Power offered $5,000,000, less deductions which would 
have eliminated most of the dollar payment, for the Warrior Steam 
Plant and the steam plant at Nitrate Plant No. 2 and it offered to 
complete Wilson Dam at its own expense. It did not offer to produce 
any fertilizer and it did not offer to pay the government anything 
for the investment already made in Wilson Dam. Since it was clear 
that no one could acquire the site unless he did offer to produce 
fertilizer, or was able to make Congress think fertilizer would be pro- 
duced if the offer were accepted, the Alabama Power Company agreed 
to supply secondary power free for fertilizer purposes. What that 
boiled down to was that for $5,000,000, the company would acquire 
all the existing federal investment, get all the prime hydro power and 
steam power at distress prices, and simply allot some of the secondary 
power of relatively small value to be used for fertilizer production. 
Congress rejected this offer also. 

In 1924 the Alabama Power Company, Tennessee Electric Power 
Company, and the Memphis Power and Light Company jointly pro- 
posed a long-term lease arrangement for Wilson Dam and the steam 
plant at Nitrate Plant No. 2, and also for Wheeler Dam, which the 
companies agreed to construct at the expense of the United States. If 
the United States decided not to have Wheeler Dam built, the com- 
panies could do so at their own expense and one-third of the cost 
would be borne by the United States as compensation for navigation 

Legal Foundations 21 

improvements. The full rental was not to begin for a period of eleven 
years after the lease began to run. Prior to that time smaller amounts 
would be paid. The proposal also contemplated that a separate cor- 
poration would be established to lease Nitrate Plant No. 2 at a rental 
to be fixed by Congress. This corporation would produce up to 50,000 
tons a year of nitrogen fertilizer as rapidly as called for by com- 
mercial demand therefor, at a price which would insure a net profit 
not in excess of eight per cent on the annual cost of production and 
sale. This offer was not seriously considered. The hedges on fertilizer 
production, the inadequacies of the return which the United States 
would receive on its investment, and the fact that agitation favoring 
the Ford proposal was at its peak all contributed to the decision to re- 

Two years later the power companies made their last offer. Like 
the 1924 proposal this last approach contemplated creation of two 
corporations, one to operate the power facilities, the other a fertilizer 
company to operate everything else. The fertilizer company would 
lease its facilities for a fifty-year period for a rental of one dollar per 
year. It agreed within six years to operate the plants to produce 
20,000 tons of nitrogen a year. Fertilizer would be manufactured to 
meet market demands except that whenever fertilizer containing in 
excess of 5,000 tons of nitrogen was in storage and unsold, the obliga- 
tions to produce fertilizer would cease until the stock was reduced to 
the 5,000-ton figure. Fertilizer was to be sold at a profit limited to 
eight per cent on cost. The costs were specified to include all costs 
entering into operation and maintenance of the leased premises, the 
manufacture, storage, sale, and distribution of fertilizer; six per cent 
on the capital invested by the company; and 71/2 per cent annual de- 
preciation on the plants erected by the company. The power company 
was to lease the power facilities under arrangements somewhat similar 
to those in the 1924 proposal but the payments which were to be 
made were considerably higher. For the first time the companies recog- 
nized and agreed to pay for additional primary power that would re- 
sult from up-river improvements. Although the payments which would 
be made under the lease depended upon the amount of additional 
primary power developed at Wilson and Wheeler Dams as a result 
of the construction of headwater storage projects on the tributaries, 
the maximum payments would not have been enough to yield a re- 
turn on the cost of any such improvements. The maximum payment 
under the lease would return only 80 per cent of the government's 
initial power investment plus interest at 4 per cent. Like the other 

22 Twenty Years of TVA 

offers, this proposal represented an attempt to get the power plant at 
a bargain without undertaking any risk or any real responsibility for 
the production of fertilizer. 

Last among the offers to be examined here — there were about a 
dozen in all — was the proposal of the Farmers' Federated Fertilizer 
Corporation. The promoters of this corporation agreed to put up 
only 1 1,000,000. For that they were to get a fifty-year lease on the 
whole $125,000,000 investment at Muscle Shoals. The investment fig- 
ure had gone up since Ford's proposal, because the government had 
invested additional amounts to complete Wilson Dam. Fertilizer pro- 
duction would be at the request and for the account of a so-called 
Farmers' Board, headed by the Secretary of Agriculture, which was in 
effect a government agency. The promoters thus took no risk what- 
ever so far as fertilizer was concerned, because the Farmers' Board 
would have to pay whatever the cost of the fertilizer turned out to be. 
The "rental" during the lease term was a flat amount ($22.29 P er 
kilowatt-year) for primary hydro power. Secondary and steam power 
were not to be paid for at all. Even with respect to the "rental" based 
on primary hydro power, numerous deductions were provided which, 
in effect, placed upon the government most of the risks of the enter- 
prise. One provision represented an interesting departure: a research 
board was to be set up to work with the Farmers' Board and with 
the corporation to try to reduce the cost of fertilizer, including re- 
ductions by the use of lower grades of power than primary power, 
and the corporation was to get half of the savings. Since the fertilizer 
plants could utilize secondary power, what this meant was that the 
government would have to pay as a gift half the difference between 
the value of primary and secondary power. Here was another pro- 
posal in which the promoters, in return for properties of great value, 
promised nothing, took no risks, and offered to put up only a negligi- 
ble amount of money. Like the several other offers, it was rejected. 

Efforts at Action by Congress 

During the period covered by these offers, many bills 
were introduced for government operation on the part of those who 
felt that it was hopeless to expect these properties to be put to success- 
ful use by a private corporation. They began in 1921 with the so-called 
Baker bill. This bill, drafted at the request of Secretary Newton D. 
Baker of the War Department, provided for government operation 
of both the fertilizer and the power facilities. Mr. Baker later changed 
his views. He was leading counsel for the private utilities when they 

Legal Foundations 23 

challenged the constitutionality of the TVA Act some fifteen years 

Senator Norris, who took a major part throughout this period in 
the debates on the Muscle Shoals question, and who contributed to the 
analysis of the various private offers, introduced his first bill in 1922. 
It provided for a Federal Chemical Corporation to produce and dis- 
tribute fertilizer for the purpose of keeping fertilizer prices down. 
The Secretary of War was to finish Wilson and to build Wheeler Dam 
and others for power and navigation. Flood control was not men- 
tioned. The Federal Chemical Corporation was to dispose of surplus 
power, with preference to public agencies. No authority was granted 
for the construction of transmission lines, a question that later be- 
came one of the most controversial in the whole legislative history of 

The first Norris bill was not passed, and in 1924 the Senator in- 
troduced another and somewhat different one. A very similar bill was 
introduced in 1926. The second and third Norris bills provided again 
for the completion of Wilson and the construction of Wheeler and 
of other dams for storage purposes. The nitrate plants were to be 
turned over to the Secretary of Agriculture; power facilities were to 
be placed in the hands of a power corporation which was to give 
preference to public agencies and individuals. This time there was an 
authorization for the construction of transmission lines in order to 
permit wider distribution of the power. Senator Norris had come to 
recognize that unless the authorization to generate and market the 
electric power was coupled with the ability to build transmission lines, 
the announced preferences for use of the power by public agencies 
and individuals could not be achieved. This is because local public 
agencies and individuals could not afford to build their own trans- 
mission lines and the dams would be useless as a source of power sup- 
ply unless the preferred customers happened to be located adjacent 
to them. As a practical matter, unless the government could build 
transmission lines, the only possible customer for power developed at 
Wilson Dam would be the Alabama Power Company. For the first 
time, the bills set forth something of a power policy. The power ob- 
jectives were low cost and wide use. The Secretary of Agriculture was 
entitled to a limited amount of power for fertilizer purposes. This 
provision reflected Senator Norris' growing awareness that the ferti- 
lizer properties at Muscle Shoals should, perhaps, not be operated in 
their then status, and that the power development was more significant 
than the fertilizer, on the basis of the existing fertilizer properties. 

A fourth bill was introduced in 1927. It was only a brief bill in- 

24 Twenty Years of TVA 

tended to provide interim authority to the Secretary of War. Wilson 
Dam had been completed in 1925, and Senator Norris wanted to give 
the Secretary of War temporary authority to dispose of power and to 
build transmission lines so that the government would not be at the 
mercy of the Alabama Power Company. That bill, too, failed to pass. 
In 1928 Senator Norris introduced a similar bill, but its history 
was very different. It differed from the 1927 measure principally in 
that the Secretary of Agriculture was directed to determine the feasi- 
bility of producing nitrate fertilizers at the Shoals, again a reflection 
of the question in Senator Norris' mind of the feasibility of operating 
these nitrate plants. After the Senate had passed the bill, however, it 
was converted by the House into a comprehensive measure for the 
development of the Tennessee River, something that comes fairly 
close to the present TVA Act. Apparently, Congress had by this time 
become pretty well convinced there would be no satisfactory private 
offer. The bill as amended by the House provided for the creation of 
the Muscle Shoals Corporation of the United States, to be directed by 
a part-time board of five men. Power was to be sold at the highest 
price obtainable, fertilizer at the lowest reasonable price. The bill 
provided for the construction of Cove Creek Dam, which is now Norris 
Dam in the TVA system, but did not provide for construction of 
other projects. It passed Congress substantially as amended by the 
House, but was pocket-vetoed by President Coolidge. A very similar 
bill was passed by a Republican Congress in 1930. The bill differed 
from the 1928 bill primarily in that it permitted the lease of the ni- 
trate plants. This time, President Hoover vetoed it. Another Norris 
bill was introduced in 1931, but this did not pass. Meanwhile, Presi- 
dent Hoover appointed a number of commissions to make further 
studies, but nothing came of their work. 

The TVA Act 

Finally, in 1933, the Act providing for the Tennessee 
Valley Authority became law. 1 This act was a combination of bills 
introduced by Representative (now Senator) Hill and Senator Norris, 
each making use of the great body of legislative history which had 
accumulated through the years. It differed in important ways from 
the bills which had been vetoed in 1928 and 1930. The 1933 measure 
reflected Franklin D. Roosevelt's interest in unified planning; it pro- 
vided for integrated use of all of the water resources of the Tennessee 
Valley region; it contained a comprehensive blanket authorization 
^8 Stat. 58, as amended, 16 U.S.C. sees. 831-83^ (1952). 

Legal Foundations 25 

for the construction of projects on the Tennessee River; and it set 
out a fully developed power policy. 

The statute set up as a broad goal, not the limited objectives of 
producing and distributing power and producing and selling fertilizer, 
but the physical, economic, and social development and improvement 
of the whole area. Thus, it provided the administrators of TVA with 
a clear goal. Second, it provided a general, but clear-cut assignment 
to develop the river, leaving the details to TVA. As originally passed 
in 1933, the act authorized TVA to construct projects at any point 
along the Tennessee River or any of its tributaries. As amended in 1935 
it was more specific, but still did not tie TVA down on details. TVA 
was directed to construct such dams and reservoirs on the Tennessee 
River and its tributaries as, in conjunction with Wilson Dam and 
other dams then under construction, would provide a nine-foot chan- 
nel in the river and maintain a water supply for the same from Knox- 
ville to the mouth of the river, would best serve to promote navigation 
on the Tennessee River and its tributaries, and would control destruc- 
tive flood waters in the Tennessee and Mississippi River drainage 
basins. The act also provided in general how the projects should be 
operated, specified that preference should be given navigation and 
flood control, and stipulated that the power operations must be con- 
sistent with the navigation and flood control objectives. 

In addition, the act was based upon the policy of regional decen- 
tralization of resource development functions, and located the offices 
of TVA within the region. For purposes of river management the 
watershed was adopted as the operating area. The act created the 
TVA as a government corporation with the flexibility and the auton- 
omy required to accomplish its tasks. The statute projected the policy 
of working through existing state and local agencies, and of facilitating 
the work of those agencies. It adopted the multiple-purpose concept 
of river development, with each structure, insofar as feasible, made to 
do double, triple, or quadruple duty. 

In the statute the relationship between land and water resources 
was recognized — that poor water use could interfere with the proper 
use of land, and improper use of land could interfere with the effec- 
tive use of water; and that the proper development of one would aid 
and support the proper development of the other. The act authorized 
the use and improvement of the fertilizer plants, and provided both 
for experiments in the production of improved fertilizers and in the 
use of new and improved processes, and for plant scale demonstra- 
tions of those products and processes. Finally, the act laid down the 
fundamentals of a public power program. 

26 Twenty Years of TVA 

The a ct as origin ally passed has been amended severaljtimes. The 
four principal amendme nts or_groups of amendme nts (there were 
sornlTotfTers) were passed i n 1935, 1939, 1940, and 1948. The 1935 
amendments clarified the river develop ment prog ram, as to both 
the - construction of projects and their operation. The 1939 amend- 
ments a uthori zed the ac£uisition _of the major utility properties in the 
Tennessee Valley area and thereby fixed on TVA the obligation for 
future power supply in the area. The amendments also served to give 
practical importance to the authorization, already in the act, for the 
construction of steam plants, because without the assumption of 
utility obligations the steam plant authorization would be of much 
less practical importance. The 1940 amendment changed the authori- 
zation to make tax-equivalen t pay ments to the Valley statesjtp put it 
into realistic and workable form, considering the growth and dimen- 
sions of TVA. Finally ca me the provisions in the 1948 Ap propriatio n 
Act which, while not technically a part of the TVA Act, nevertheless 
affected TVA directly by es tablishing a definit e s chedul e_jor__rep ay- 
men t over a for ty-year period of appropriated capital invested in 
power facilities. 

TVA as a Government Corporation 

There is, of course, no magic in the fact that TVA is a 
government corporation. Congress could create an agency, call it a 
corporation, and give it no more freedom, or perhaps give it less 
freedom, than a regular government bureau. Or Congress could grant 
to one or more regular government bureaus far more freedom and 
flexibility than that accorded any government corporation. However, 
when Congress provides that an agency shall have a corporate form, 
it does so for a purpose. It recognizes thereby that such an agency 
needs more freedom in its operations than the regular government 
agencies. Consequently, along with the corporate status go usually a 
number of exemptions from restrictions which are applicable to 
other types of governmental agencies. Certainly this is true in the 
case of TVA, perhaps more so than in that of any other federal 
agency. TVA does not have complete autonomy, nor would such 
autonomy be desirable. It is essential in any government agency to 
reconcile the need for enough freedom to operate with efficiency and 
economy with the need to account to the President and to Congress. 
This requires combining a high degree of flexibility with adequate 
control. TVA spends money and carries on work for which Congress 

Legal Foundations 27 

and the Executive, as well as TVA, are responsible. TVA's administra- 
tive freedom is therefore, and properly, a qualified freedom. All TVA 
can be said to have in the context in which it operates are the neces- 
sary degree of freedom and the opportunity for initiative required to 
discharge the responsibilities conferred in the act. The corporate 
status of TVA is simply an administrative tool designed for the job 
the TVA is required to do. 

It will prove useful to examine the principal organizational and 
procedural features which flow from the agency's corporate status. 
In the first place, TVA is not in a federal department. It does not 
report to a secretary in the President's cabinet, but is managed by its 
own Board. This has its disadvantages as well as its advantages. TVA 
is not represented at cabinet meetings, and works in a framework 
of policies which are determined at a level where it is not represented. 
That is the negative side of the coin, but consider the positive side. 
The TVA Board has some genuine responsibility; it has room for 
initiative; and it can have a mind and a voice of its own in its day-to- 
day decisions, subject to general guidance and control by the Execu- 
tive and Congress. 

Another important feature is the general authorization in the basic 
statute for the entire program. Ordinarily, a government agency which 
wants to build a project must first submit that project to one of the 
legislative committees of Congress, whichever one happens to have 
jurisdiction. If it is a project in the field of agriculture, approval is 
obtained from the agriculture committees of the two houses of Con- 
gress. If it is to build a dam, the agency goes to the public works com- 
mittees to get a bill to authorize an appropriation. The bill must 
pursue the full legislative route of Congressional and Presidential 
approval. Then the agency goes back to Congress, through the ap- 
propriations committees, to get its appropriations. The procedure is 
cumbersome and time-consuming. It is a procedure which invites 
frustrations of program, from which TVA has been spared by the 
broad program authorization in the original TVA Act. Thus TVA 
requires only a single Congressional action to begin a project, an ac- 
tion initiated through the appropriations committees. 

Another positive aspect of TVA's flexibility and freedom lies in its 
control over its own personnel. TVA is not in the civil service system, 
and has thereby been enabled to develop personnel procedures which 
serve its particular program needs, which are quite different from 
those of most agencies. For example, TVA is the only agency in the 
government which does practically all of its own construction work, 

28 Twenty Years of TVA 

and over half of TVA's employees are trades and labor employees. 
This presents a very different kind of personnel problem from that 
which other government agencies face. 

Again, TVA controls its own expenditures. Most government 
agencies are audited by the General Accounting Office, which will 
hold an agency's disbursing officers responsible for any expenditure 
which the GAO thinks goes beyond the authority of the officer or the 
authority granted the agency by the statutes. Before other government 
agencies make expenditures which they think may raise any question 
at all, they clear in advance with the General Accounting Office. 
Through his control over expenditures the Comptroller General, who 
heads the General Accounting Office, has much authority over the 
way programs are carried out but no responsibility for their success 
or failure. The General Accounting Office audits TVA's books and 
reports to Congress any disagreements with TVA as to the propriety 
of expenditures, but the expenditures cannot be disallowed. The TVA 
Act makes it possible for TVA to determine within its own organiza- 
tion, using its own staff and its own lawyers, what expenditures come 
within the limits of its authority. 

Within limits, TVA controls its own revenues. It is required to 
deposit surplus receipts in the Treasury, and, of course, it has to pay 
back appropriated capital invested in its power program according 
to a stipulated schedule. Congress must act before TVA can start a 
new power project. But within those limits TVA can reinvest its 
revenues as required in carrying out its programs — not all programs, 
but its power and fertilizer programs, which are the ones which pro- 
duce the revenues. 

TVA controls the acquisition of the property it needs and the dis- 
posal of surplus property. This may not seem important at first glance; 
and perhaps to some agencies which do not have a program like TVA's, 
it is not important. Most agencies cannot themselves dispose of tracts 
of land they no longer need. If an industry wants to buy a surplus 
tract from one of the executive departments for a plant site, it may 
make little difference in the over-all program of the department 
whether it takes a year to transfer that site or whether the transfer is 
made at all. It makes a big difference to TVA because industrial 
growth contributes to the region's economy, and TVA's job is to aid 
in the progress of the region. 

Finally, TVA has its own legal counsel. It can sue and it can be 
sued. It can handle its own condemnation cases. It has complete con- 
trol over the conduct of its litigation. That, too, may not be important 
for most agencies, but to TVA as a local agency living in the region, 

Legal Foundations 29 

it is of enormous importance that a citizen of the Valley should be 
able to make his settlement directly with TVA and not be forced to 
deal with someone in Washington far removed from the controversy. 

TVA and the Courts 

TVA's constitutional litigation is an essential part of 
its history. From the moment of its creation it faced the threat of 
litigation, and that threat soon became an actuality. When the act 
was passed, the constitutional status of federal stream-improvement 
projects had already been passed upon by the courts, and most ob- 
jective students would have thought that the constitutional issues 
were settled. The leading case in 1933 was Arizona v. California, 2 in 
which the United States Supreme Court had sustained the constitu- 
tionality of the construction by the United States of the Hoover Dam 
on the Colorado River in Arizona and Nevada. There were, however, 
some differences between the TVA statute and the legislation under 
which Hoover Dam was constructed, and in view of the intense op- 
position to TVA by the private utilities it was clear that litigation 
was imminent. 

The utilities probably believed also that the Supreme Court en- 
vironment at that time was favorable for them. In Franklin D. Roose- 
velt's first term the Supreme Court handed down a series of deci- 
sions holding various federal statutes unconstitutional. The Schechter 
case, 3 holding invalid the NRA, and the Butler case, 4 holding invalid 
the AAA, are examples; and there were several other decisions which 
invalidated much of the legislation passed early in the New Deal. 
Under these circumstances the utilities hoped that they could dis- 
tinguish the TVA case from the precedents and secure the elimina- 
tion of TVA through the courts. The utilities faced one initial hurdle, 
and that was the problem of legal standing to sue. If C thinks that A 
has breached a contract with B, C cannot go into court and vindicate 
B's rights. C not only has the problem of proving that A has done 
something he should not have done, or that A owes damages to some- 
body; C must also prove that A has done him a legal wrong and that 
he is entitled to relief. The Supreme Court had held in the Frothing- 
ham case, 5 that a federal income taxpayer had no standing as such to 
sue to challenge the constitutionality of legislative action authorizing 

2283 U.S. 423 (1931). 

3 Schechter Corp. v. United States, 295 U. S. 495 (1935). 

4 United States v. Butler, 297 U. S. 1 (1936). 

5 Frothingham v. Mellon, U. S. 447 (1923). 

30 Twenty Years of TVA 

the expenditure of tax funds. In the Frothingham case the Court said 
that the taxpayer might have suffered some loss in common with all 
other taxpayers, but that he had no injuries redressible in the courts, 
that his mere status as a taxpayer gave him no standing to sue. Hence 
the utilities attempted to develop some other theory on which they 
could get into court. 

Their first effort was in a case filed in 1934 called the Aetna Coal 
Company case, 6 in which some coal companies claimed that their 
business as coal producers was threatened by TVA's production and 
sale of hydroelectric power, which would take away their coal market. 
Looking at the situation twenty years later, with TVA becoming the 
largest purchaser of coal in the country, and the entire utility market 
for coal greatly stimulated as a result of the TVA program, that 
argument sounds ironical, but at the time the complainants presum- 
ably believed it. Perhaps that case was dropped because the lawyers 
themselves saw that they would never hurdle the standing-to-sue point. 
It was dropped in favor of the Ashwander case, 7 a suit brought in 
1934 by holders of preferred stock in the Alabama Power Company. 
The suit was brought to enjoin the company from performing a con- 
tract which had been entered into between TVA and the Alabama 
Power Company and certain sister companies. The contract with the 
Alabama Power Company, which served the vicinity around Muscle 
Shoals as well as most of the rest of Alabama, provided that the com- 
pany would buy a sizable block of power which TVA was then pro- 
ducing at Wilson Dam, that it would sell its transmission lines and 
rural lines in the vicinity of Wilson Dam to TVA, and that it would 
negotiate with the municipalities of that area in an effort to sell to 
them the urban distribution systems. The distribution systems were 
not to be sold directly to TVA. TVA was to lend its good offices in 
those negotiations for the distribution systems, and pending successful 
culmination of the negotiations was not to sell the municipalities 
power except over the Alabama Power Company's lines. In order 
to enhance the prospects for success in these negotiations TVA agreed 
not to sell power for a period of three months to any distribution 
system built by the municipalities which duplicated the Alabama 
Power Company system. Negotiations between the company and the 
municipalities were not successful and the suit followed. 

The stockholders' standing to sue rested on an allegation that the 

6 Aetna Coal Co. v. Tennessee Valley Authority, In Equity No. 810 (N.D. Ala. 


7 Ashwander v. Tennessee Valley Authority, 8 F. Supp. 893 (N.D. Ala. 1934). 

Legal Foundations 31 

power company had entered into the contract under duress because of 
threatened unlawful competition from the federal government and 
that the company should have resisted that duress in the courts. The 
stockholders asserted that since the power company had failed to do 
so they could vindicate the company's rights. The complainants asked 
that the contract be annulled, and they also asked for a declaratory 
judgment that the whole TVA program be held unconstitutional, 
because under the fraudulent guise of navigation and flood control 
the federal government was setting up a "power empire." 

One of the key constitutional provisions forming the basis of this 
litigation is the commerce clause of the Constitution, Article I, sec- 
tion 8, clause 3. This is an authorization to Congress "To regulate 
Commerce with foreign Nations, and among the several States, and 
with the Indian Tribes." The Supreme Court had long held that this 
clause conferred upon Congress authority over the instruments of 
transportation which convey the commerce, including the develop- 
ment of navigation. The war powers, set forth in clauses 11 through 
16 of section 8 of Article I, are also important; the power to declare 
war, to make rules for the government and regulation of land and 
naval forces, and various other powers relating to war and defense. 
Under clause 1 of section 8 of Article I, Congress is also empowered 
"To lay and collect Taxes, Duties, Imposts and Excises, to pay the 
Debts and provide for the common Defence and general Welfare of 
the United States." Finally there is the property clause, Article IV, 
section 3, clause 2, "The Congress shall have Power to dispose of and 
make all needful Rules and Regulations respecting the Territory or 
other Property belonging to the United States." It was TVA's con- 
tention that its dams, Wilson Dam in particular, had been con- 
structed under the war powers and the commerce clause; and that the 
power generated at the dam was the property of the United States and 
could be disposed of pursuant to the property clause of the Constitu- 
tion as it had been interpreted over a period of a century and a half 
by the Supreme Court. 

TVA attempted to limit the case to the issue of the disposal of 
Wilson Dam power, and to avoid going into the broad issues of the 
alleged power conspiracy. In the United States District Court in 
Birmingham, where the case was tried, the standing of the complain- 
ants to sue was sustained, not precisely on the duress basis claimed by 
the plaintiffs, but rather on the ground that the stockholders had the 
right to vindicate the company's obligation to rescind an unlawful 
contract. The court restricted the statutory and constitutional is- 

32 Twenty Years of TV A 

sues to the disposal of Wilson Dam power, but held, as to such power, 
that the statutory authorization to dispose of surplus power did not 
cover all the power which could be generated at the dam and which 
was not needed in the operation of the navigation locks and fertilizer 
plants, but rather only the amount which unavoidably would be 
generated in taking care of the requirements of the locks and the 
fertilizer plants. That is to say, if TVA tried to produce 15,000 kilo- 
watts for the locks and fertilizer plant and accidentally produced 
15,500 kilowatts, it could dispose of the extra 500 kilowatts of capacity, 
but could not generate the extra 500 kilowatts on purpose. This was 
equivalent to killing TVA's entire power program, but the District 
Judge said if the act were differently construed it would be uncon- 
stitutional. He was reversed by the Circuit Court of Appeals, 8 and 
that court was sustained by the United States Supreme Court. 

The decision of the Supreme Court 9 in effect agreed with Judge 
Grubb of the District Court on the question of standing to sue, but 
on the merits of the constitutional and statutory issues it held that 
TVA had acted within its powers in disposing of the output of Wilson 
Dam. The decision, though limited to Wilson Dam, was based on the 
broad principles that the dam had been validly built in the exercise 
of the defense and navigation powers of the government, and that, 
under the property clause, TVA could dispose of the power generated 
at the dam in any appropriate way. However, there was no decision 
on the issues of the complaint going to the whole range of the TVA 
power program. The Court specifically said it was not passing on those 
issues. This was all the encouragement the utilities needed to try 
again in the courts. 

Within a few months after the decision of the Ashwander case in 
1936, they filed another bill. This time eighteen companies joined 
together to sue TVA. They had nothing in common except that none 
of them liked TVA and that all of them conducted operations within 
150 miles of one or another of TVA's projects then completed or 
under construction. They alleged that TVA, under the false guise of 
navigation, flood control, and national defense, was entering into a 
vast program of power production, which they said was its principal 
aim. By the time the case was tried there had been a change in the 
statutes providing for the composition of the trial court in this type 
of case, where the constitutionality of a federal law was involved, 
the statutes as amended providing that instead of one judge three 
judges should sit. The three-judge district court decided every factual 

8 7 8F.2d 5 78 (5th Cir. 1935). 
9 297 U. S. 288 (1936). 

Legal Foundations 33 

issue in TVA's favor. 10 That decision was important, for when the 
case went to the Supreme Court, 11 it was not decided on the merits, 
but rather on the basis of standing to sue; and the three-judge district 
court opinion is, therefore, the only decision which has squarely found 
the facts relating to TVA's over-all power program. The district court 
held that the TVA hydroelectric projects were the best navigation 
dams possible, and that no other system of dams would provide as 
good navigation on the Tennessee River as those which had been 
designed and planned by TVA. It held that the TVA hydroelectric 
system was the only system which would fully serve all the useful 
purposes — navigation, flood control, and power production. It held 
that the projects had been designed with primary emphasis on naviga- 
tion and flood control, and that they had been operated with like 
emphasis. The opinion completely sustained the good faith of TVA 
in conducting its program under the act. On the law of the case, it 
held that the construction of the TVA projects and the disposal of 
the power they generated came within the national defense, com- 
merce, and property clauses. 

As has been indicated, the Supreme Court decision rested on stand- 
ing to sue. It held that the utilities had suffered no legal injury, and 
that they had no common basis for filing the suit. The suit was dis- 
missed. This was the last of the major constitutional attacks on TVA. 
As a matter of fact, the utilities had so little confidence in their own 
cause that one by one, while the case was going on, a number of 
them sold certain of their properties to TVA and to various local and 
co-operative agencies which retailed TVA power, and dropped out 
of the case. The case thus wound up in the Supreme Court as a twelve- 
or thirteen-company case instead of an eighteen-company case. 

Since that time the constitutional issues which the Supreme Court 
declined to decide in the TVA cases have been decided in cases not 
involving TVA. In the Appalachian Power Company case, 12 a power 
company challenged the authority of the Federal Power Commission 
under the Federal Water Power Act to insert in a power license certain 
conditions not directly related to navigation development. The com- 
plaint alleged that federal authority constitutionally extended to 
navigation only. The Supreme Court held that the power of the 
federal government extended to the full development of the river 
for all purposes. 

10 Tennessee Electric Power Co. v. Tennessee Valley Authority, 21 F. Supp. 947 
(E.D. Tenn. 1938). 

11 306 U.S. 118 (1939). 

12 United States v. Appalachian Power Co., 311 U. S. 377 (1940). 

34 Twenty Years of TVA 

In Oklahoma v. Atkinson Co., 13 a bill was filed to enjoin the con- 
struction of Denison Dam on the ground that a large part of the 
dam could be used only for flood control and that the federal power 
over the river did not extend to flood control. The Supreme Court 
gave that argument short shrift. It stated that commerce includes the 
full use of the river, including the prevention of floods which do dam- 
age to commerce. 

As we have seen, TVA is deeply rooted in the nation's history. Each 
phase of its program arose out of varying needs and problems, but it 
is a principal distinction of the TVA Act that it serves as a vehicle 
for uniting as a single resource development program these diverse 
but interrelated public interests. The key administrative feature of 
the TVA Act is the establishment of a framework adapted to the 
nature of the problems and responsibilities of the agency. The act 
not only unites and integrates the various program activities but also, 
and uniquely in the field of resource development, tailors the ad- 
ministrative arrangements to the special needs of the program. The 
goal of all federal administration is a balanced accommodation be- 
tween executive responsibility and freedom on the one hand and Con- 
gressional control and direction of basic policies on the other. The 
record shows that the TVA Act is one of the most successful of the 
efforts of Congress to achieve such a balance. 

"313 U.S. 508(1941). 

Chapter 3 
Administrative Foundations 

By John Oliver 

Ihe tva act of 1933 provides the foundations for 
organizing and administering a unified program of resource develop- 
ment in the Tennessee Valley and for making certain contributions 
to national defense and welfare. The act assigns to the Board of 
Directors full responsibility for directing a variety of complex pro- 
gram assignments, subject to review by the President and the Con- 
gress, and for establishing "... a system of organization to fix respon- 
sibility and promote efficiency." The breadth and novelty of the 
program assignments are matched with equally broad latitude for ad- 
ministration, for the organic act provides an unusual degree of flexi- 
bility in the realm of management. Having assigned to the Board the 
monumental task of developing the full potential of one of America's 
great river systems, it was the clear intent of Congress not to have the 
job fail in execution for want of sound administration. The corporate 
form buttressed with the necessary managerial flexibility to achieve 
results, which is taken for granted in private enterprise but not usually 
associated with governmental activity, was vigorously endorsed by 
the President and adopted by the Congress. Thus, highly important 
and complex goals and the means of achieving the goals were effec- 
tively joined in the organic act. This joining of program and method, 
of ends and means, has had a dynamic effect on all of TVA's mana- 
gerial thinking. Many of the problems which normally arise between 
operating divisions and managerial and control units were early re- 
solved by applying the full logic of the statutory provisions integrat- 
ing program and management. 

The development of a sound organization with clearly defined 
duties and responsibilities, clarification of the working relationships 
between Board and staff, and development of traditions which 
emphasize co-operation, mutual respect, and "self-co-ordination" did 
not, of course, come to full flower in one flash of insight and action. 
Much of the balance of this essay is devoted to a description of the 


36 Twenty Years of TVA 

general managerial concepts which guide TVA administration and 
of the high points in the evolution of the agency's administrative 
machine. The major programs and their administration will be de- 
scribed in later chapters. 

Organization of the TVA 

The organization of the TVA, which is summarized on 
the accompanying chart, clearly reflects the program assignments set 
forth in the TVA Act plus the normal auxiliary services of a mana- 
gerial character. It reflects essentially a straightforward organizational 
response to the multiple-purpose regional development responsibili- 
ties which Congress assigned to the TVA Board. At the apex of the 
organization is the full-time Board of Directors, appointed for stag- 
gered nine-year terms by the President with the consent of the Senate. 
The Board is authorized to exercise all of the powers of the Corpora- 
tion. It establishes general policies and programs; appraises progress 
and results; approves major personnel appointments, purchases, con- 
tracts, budgets, and other items of importance; and fixes TVA's basic 
organization. The Board appoints its principal executive officer, the 
General Manager, to carry out its policies; it is advised on legal mat- 
ters by the General Counsel, who also serves as Secretary to the Corpor- 

The Office of the General Manager includes that officer and his 
immediate staff, the Budget Staff, Information Staff, Washington Staff, 
and a Tributary Watershed Representative. As TVA's principal 
administrative officer, the General Manager is responsible for direct- 
ing and co-ordinating the execution of programs, policies, and de- 
cisions of the Board of Directors, subject to such controls as it may 
establish. He assigns duties and makes delegations to divisions and 
approves major management methods, appointments, and organiza- 
tion changes. He brings before the Board matters which require its 
consideration. The Budget Staff is responsible for preparation of 
the budget and for liaison with the Bureau of the Budget. The In- 
formation Staff prepares the annual report of the Corporation, fur- 
nishes information to the public at its request, and provides technical 
library services to employees. The Washington Staff aids in liaison 
with Congress, the Executive Office of the President, and other federal 
agencies. The Tributary Watershed Representative co-ordinates the 
work of TVA divisions as they are focused on an experimental small 
watershed project. 

Four divisions provide management and staff services. The Divi- 







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38 Twenty Years of TVA 

sion of Personnel assists in the development, administration, and ap- 
praisal of policies and standards in personnel administration; the 
Division of Finance in policies concerning finance, accounting, and 
auditing; the Division of Property and Supply in policies relating to 
acquisition, transfer, and disposal of property, provision of transpor- 
tation and office services, and analysis of office methods. The Division 
of Law handles all legal problems in connection with the business of 
TVA and assists on legislative matters relating to TVA activities and 
on negotiations to which TVA is a party. 

The largest program activities of the TVA as measured in numbers 
of employees and dollar expenditures are centered in three offices, each 
of which has from two to four divisions. The Office of Engineering de- 
velops, recommends, and carries out plans for water control and use in 
the Tennessee River and its tributaries. It plans, designs, and builds 
large dams, hydro generating plants, steam generating plants, and other 
structures required to carry out TVA's objectives, and directs the in- 
tegrated control of water operations of the reservoir system. The Office 
of Power develops and carries out plans, policies, and activities for 
the generation, transmission, and utilization of electric power. The 
Office of Chemical Engineering formulates, recommends, and executes 
plans, policies, and programs of research in chemistry, chemical engi- 
neering, and metallurgy. It also designs and operates chemical plants 
for developing and demonstrating methods for producing new or im- 
proved fertilizers and for making chemical products for national de- 
fense purposes. 

The activities of two TVA divisions are largely focused on prob- 
lems of water control and utilization on the land and on the maxi- 
mum economic development of agricultural and forest resources of 
the Valley. They are also distinguished by the large number of con- 
tractual relationships which they have with state and local govern- 
mental and private organizations for experiments and demonstrations 
in resource development. The Division of Forestry Relations formu- 
lates, recommends, and conducts programs in forest fire protection, 
reforestation, forest management, watershed protection, and related 
activities, and in fish and game. The Division of Agricultural Rela- 
tions carries out plans and projects for the testing and introduction 
of new forms of fertilizer and their use in improved systems of farm 
management; for the readjustment of agricultural areas affected by 
TVA operations; and for related activities. 

The three remaining divisions combine certain service activities 
with important functions related to regional development. The Divi- 
sion of Health and Safety recommends and carries out plans for the 

Administrative Foundations 39 

health and safety of employees and the public affected by TVA activi- 
ties (e.g., malaria control on the TVA lakes), and co-operates with 
other governmental and private agencies in health and safety work. 
The Division of Regional Studies makes investigations, formulates 
and carries out policies, and provides technical advice on the most 
effective use of the Tennessee River system for navigation. It also 
makes economic, governmental, and planning studies for the guidance 
of TVA programs and develops experiments through demonstrations 
in resource development in co-operation with universities, state and 
local governments, and other agencies concerned with regional de- 
velopment. The Division of Reservoir Properties administers reservoir 
properties; manages employee housing and services for construction 
projects; provides services and facilities for property protection and 
law enforcement; and aids in furthering public understanding of TVA 
programs. It is also responsible for site planning and for the recrea- 
tional aspects of regional development. 

This organization has remained unchanged in its essential features 
since 1937, when the basic administrative pattern was fixed. Minor 
changes have been introduced in response to new needs, but they have 
not modified in any important respect the organizational framework 
then established. 

Evolution of the Organizational Pattern 

The TVA Act provided for a three-man Board of Di- 
rectors to carry out the provisions of the act, but gave no detailed in- 
structions for internal administrative arrangements. As a consequence, 
TVA's earliest years were characterized by considerable evidence of 
"trial and error" as the Board sought to find the best administrative 
arrangements for a complex program marked by extremely rapid 
growth. The Board, at one of its earliest meetings in 1933, determined 
the primary organizations which would be needed to carry out the 
program; agreed to divide the administrative work load among its 
three members; and designated the Chairman of the Board, Arthur E. 
Morgan, as "general manager" for purposes of over-all internal ad- 
ministration and co-ordination. 

Under this arrangement deficiencies were evident from the start. 
A major shortcoming arose from the fact that the Act gave no special 
authority to any one of the three Board members. The relatively in- 
dependent exercise of authority by any one member without the full 
knowledge and concurrence of the others would not be conducive to 
efficiency; and early experience emphasized the need for a strong over- 

40 Twenty Years of TVA 

all plan, together with a clear-cut system of controls. After less than 
two months of operation, the Board had developed such a general 
plan, along with an organization structure and assignment of responsi- 
bilities to carry it out. These were adopted on August 5, 1933. 

The three natural points of focus of the over-all program were on 
construction and engineering; natural resources, with emphasis on 
reforestation, soil erosion, and use of the Muscle Shoals chemical 
plant for the production of experimental fertilizers; and electric 
power. The Board of Directors still operated as both a policy-making 
and an administrative body. Administration, however, was not han- 
dled by the Board as a group, but was divided among the three direc- 
tors, each with responsibility for operation in his area and for much 
of policy formulation as well. The administrative apportionment was 
keyed primarily to the experience, background, and interests of the 
three directors. Thus, the Agricultural Division and the Chemical 
Engineering Division were assigned to Harcourt A. Morgan; the 
Transportation Rates Division and the Power Division to David E. 
Lilienthal; and the General Engineering and Geology Division and 
the Land Planning and Housing Division to Arthur E. Morgan. Re- 
sponsibility for the Forestry and Soil Erosion Division and the Industry 
Division was divided between Arthur E. Morgan and Harcourt A. 

Although the Chairman retained general direction of the adminis- 
trative aspects of the program, his designation as general manager 
was eliminated under the August 5, 1933, plan and a Co-ordination 
Division was established in the organizational line between the divi- 
sions and the Board. As the Co-ordination Division grew in size and 
importance, it made a major contribution to shaping administrative 
methods in TVA. It was never given the authority and control to 
play a clear-cut general management role, however, and herein lay 
its fatal weaknesses. 

The burden of detail on the Board members in their dual role of 
policy-makers and direct administrators inevitably resulted in the 
slighting of one or the other of these roles. A developing difference 
in viewpoint between the Chairman of the Board and the other two 
members on matters both of policy and administration, plus the short- 
comings of managerial improvisation, also pointed to the imperative 
need for further administrative change. 

It is well to recall here the provision in the Act that the agency 
be headed by a three-man Board, no member of which had adminis- 
trative authority over the other two. There are many who maintain 
that such an arrangement cannot possibly work, except as one member 

Administrative Foundations 41 

of such a group succeeds in dominating the others by force of person- 
ality or other means. TVA's experience well illustrates two points in 
this connection. One is that such an arrangement can, indeed, result 
in confusion where three strong personalities of widely differing tem- 
peraments are given co-ordinate authority. In TVA this prospect was 
given impetus by the pure volume of operating problems attendant 
upon selecting 10,000 employees and putting them to work on a gi- 
gantic and geographically dispersed program; providing them with 
policy and administrative guides; and motivating them toward the 
achievement of goals which were novel and complex. In retrospect, the 
Board's accomplishments in getting major programs quickly into op- 
eration appear quite substantial. At the same time, the differences in 
philosophies between its members palpably did not promote the inte- 
gration that has come to be the keynote of TVA operations. The 
divergence soon became so acute that the President, who had originally 
appointed the three Board members, found it necessary to intervene 
by removing the Chairman, Arthur E. Morgan. This incident re- 
sulted in an extensive Congressional investigation, which encompassed 
not only the Board of Directors but also the operations of the agency 
which the Board had built. The investigation proved to be a boon 
in disguise. It revealed and reported fundamental soundness, compe- 
tence, and integrity throughout the organization, at the same time 
clarifying many major policy issues and pointing up administrative 
deficiencies, particularly in the areas of co-ordination and integration 
of programs. 

The second point which is illustrated by TVA's experience is that 
the three-man-Board arrangement provided by the Act can be made 
to work exceedingly well, as it has done in TVA since 1937. The ar- 
rangement can and does work when two conditions are met. First, 
there must be complete acceptance of the principle on the part of 
each Board member, and in particular on the part of the Chairman, 
that he is a member of a group which acts officially only as a body 
and that he alone cannot commit TVA. This forces on each member 
and on the Board collectively a deliberation which the single adminis- 
trator, under pressure of work, might not always exercise. The Board 
arrangement thus inhibits snap judgments on important matters. 
Second, provision must be made for a focus of administrative respon- 
sibility. TVA experience suggests that such a focus must be found 
outside the Board itself. 

The administrative problems arising out of the early failure to 
distinguish between the policy-making and trusteeship functions ap- 
propriate to the Board level and those activities commonly identified 

42 Twenty Years of TVA 

with general management, sharpened by the divergent beliefs within 
the three-man Board, resulted in TVA's making its most significant 
organizational change. On June 16, 1937, the Board officially estab- 
lished the General Manager as chief administrative officer. Some three 
months later (on August 31), it adopted a basic administrative struc- 
ture which remains unchanged in its essentials to this day. Under this 
reorganization, the Board was identified as the governing body exer- 
cising major policy approval, surveillance, and ultimate control func- 
tions. At the same time, managerial direction was made the responsi- 
bility of the General Manager and of the several offices and divisions. 
As individuals, only the General Counsel and the Comptroller con- 
tinued to report directly to the Board, the former for legal opinions 
and the latter for fiscal accountability. The Chief Engineer, Chief 
Power Economist, and Chief Conservation Engineer, all of whom re- 
ported to the General Manager, co-ordinated the work of the major 
substantive divisions. Organizational adjustments since 1937 have dealt 
with parts of this basic structure rather than the whole. They have 
come about through constant managerial alertness to the need for 
adjusting structure to changing needs. They have also emerged, in 
some instances, in response to serious budget cuts and to opportunities 
for more economical operations. 

This sketch of the evolution of TVA's organization structure pro- 
vides little insight into the warmly human factors which were always 
in operation. From the beginning the Board and members of the 
staff addressed themselves to daring new experimentation in integrated 
resource development and in administrative concepts which made 
maximum demands on creativity and teamwork. The whole program 
of TVA in fact became for those involved in it a vital educational 
experiment. New combinations of highly specialized personnel were 
brought together to lay the groundwork for an expanded regional 
economy which would use the developing capital plant and the newly 
integrated resources for the economic and social rehabilitation of the 
Tennessee Valley. 

Men and women of imagination, a high sense of social purpose, 
and enthusiasm for work at creative tasks responded to the challenging 
call of TVA. But the efforts of this talented collection of individuals 
could easily have been dissipated had there not evolved a clean-cut 
organization to give them effect. Central in this development was the 
clarification of board-staff responsibilities and relationships which 
came to focus in the creation of the Office of the General Manager. 
This office became the Janus of the organization, looking to the Board 

Administrative Foundations 43 

for policy direction and approval of major programs and to the staff 
for the formulation of proposals and the execution of approved poli- 
cies and programs. 

Basic Administrative Concepts and Practices 

The effectiveness of an organization (given competent 
people as an indispensable foundation) is strongly influenced by the 
philosophy and the managerial concepts which give it direction. Yet 
philosophy and concepts, however sound and erudite, are likely to 
become mere managerial window dressing unless they are woven into 
the day-to-day operations of the organization. Since 1937 the general 
managers and their associates have given direction to the creation of 
concepts and techniques which are understood and utilized through- 
out the TVA organization. 

The nature and scope of the program assignments required that 
TVA put together the talents of engineers, chemists, foresters, agri- 
cultural specialists, land planners, and many others; yet these special- 
ists had to be organized into reasonably homogeneous organizational 
units which could be effectively supervised and held responsible for 
results. Concepts and procedures, therefore, had to be devised which 
took full advantage of the professional skills of many specialists with- 
out creating a series of organizational compartments which would 
serve as a bar to effective integration of effort. George F. Gant, a 
former General Manager, makes the point concisely in these words: 

To administer a program is both to divide and to unify. . . . But di- 
vision alone leads to anarchy. Unity must complement division. The proc- 
ess of unifying is co-ordination; it is the integration of the several parts 
into an orderly whole to achieve the purpose of the undertaking. Division 
into compartments can result in conflicts of policy, program, and jurisdic- 
tion. Improper integration of functions can result in centralization and 
enervating control. Good administration demands the maintenance of a 
balance between division and unity; it must encourage specialization and 
at the same time achieve integration. 1 

The mutual stimulation which derived from the teaming up of 
a great variety of specialists to tackle complex tasks has doubtless been 

1 George F. Gant, "Unity and Specialization in Administration." Conference 
on Science, Philosophy, and Religion in Their Relation to the Democratic Way of 
Life. Chapter 13 of Approaches to Group Understanding: Sixth Symposium, August 
23-27, 1945, p. 127. 

44 Twenty Years of TVA 

at the heart of TVA's vitality. Inevitably in such teamwork situations, 
differences of opinion among the specialists arise as to best methods of 
approach. These differences cannot be effectively resolved through a 
process of compromise, but only by " . . . finding interspecialty rela- 
tionships from the basic scientific unity which exists in the situation. 
TVA experience has shown that differences of opinion between two or 
more disciplines are usually resolved when the specialists re-examine 
the facts." 2 

Many of TVA's toughest problems, requiring the contributions 
of several specialized groups which had little previous experience 
with integrated resource development, have been solved by strict ad- 
herence to "the primacy of facts," seasoned by judgment and pa- 
tience. The "authority of relevant knowledge" rather than the author- 
ity of profession or rank has been a guiding principle in these relation- 

Gordon R. Clapp has expressed the concept with force in these 
words: "The art of letting facts persuade men is the undeveloped 
promise of modern administration. We still operate as administrators 
in an atmosphere steeped in the primitive tradition of personal power 
and the magic of command." 3 

Among the effective educational devices for bringing specialized 
personnel into contact with problems requiring a range of skills and 
judgments for solution were two councils, one called the Regional 
Planning Council, the other the Management Services Council. Both 
were chaired by the General Manager. The Director of Personnel 
served as the secretary of the Management Services Council and the 
Director of the Regional Studies Division served as secretary of the 
Regional Planning Council. For three of the formative years of TVA's 
history (1937-1940), these councils served as forums in which the 
division directors raised questions, pooled ideas, shared facts, insights, 
and imagination, and prepared advisory opinions. Toward the end of 
the three years, after the participants had had ample opportunity to 
explore the major program and managerial areas, the councils began 
to play a decreasingly important role and were finally abandoned. 

Implied in all said above is a consideration of rock-bottom im- 
portance without which no managerial concepts or techniques are 
likely to make much difference. That is the belief in the inherent 
dignity and worth of the individual employee and in his capacity to 
carry responsibility for the advancement of the program. The practi- 

2 Ibid., p. 128. 

3 Gordon R. Clapp, "Public Administration in an Advancing South," Public 
Administration Review, VIII (Summer, 1948), 175. 

Administrative Foundations 45 

cal application of such a belief leads management into deliberate 
efforts to decentralize responsibility to the lowest possible levels; to 
diffuse the sources of initiative; and to give first importance to edu- 
cation and persuasion as the basic methods of supervision. 

This same principle applies in the external application of the 
program. Most of TVA's programs, except those related to the creation 
of capital plant (engineering structures, for the most part), are de- 
pendent upon education and persuasion for their accomplishment. 
State and local agencies, and individuals, take part or not in co- 
operative programs as they are convinced that their participation 
is or is not worth while. This fact has its influence on attitudes and 
practices of all TVA personnel from the Board down through all levels 
of the organization. 

TVA maintains a system of written administrative releases as its 
basic means for the development, approval, recording, and communi- 
cation of management policies and procedures. Its principal elements 
are organization bulletins, administrative codes, and interdivisional 
instructions. The TVA Organization Bulletin, approved by the Board, 
establishes the over-all organizational structure. Office and division 
organization bulletins describe the structure and functional assign- 
ments within those units. Codes contain statements of program and 
management policy approved by the Board of Directors and the Gen- 
eral Manager. They also describe the Board's delegations of authority 
to the General Manager to administer the policies it approves, and 
convey his assignments of responsibilities and authority to offices, divi- 
sions, and staffs. Interdivisional instructions describe procedures, stand- 
ards, and methods for carrying out policy. Codes and instructions are 
assembled into manuals which are widely distributed to TVA office 
locations. In subject matter fields where extensive instructional 
material is needed, special manuals, such as the Accounting Manual, 
are prepared and distributed to those concerned. In general, TVA 
avoids spelling out detailed procedures except where uniformity or 
consistency is important, thus allowing as much discretion as possible 
to those directly responsible for doing a job. 

Maximum responsibility is placed upon the units initiating ad- 
ministrative releases to secure the participation of other divisions af- 
fected by the policies and work methods proposed. In their "bottom- 
up" development, they are subjected to appraisals as to technical 
soundness, administrative feasibility, legality, budgetary justification, 
and integration with other TVA programs before submission to the 
General Manager and the Board for approval. Where appropriate 
the contributions of employee unions are also sought during the de- 

46 Twenty Years of TVA 

velopmental stages. There is genuine effort to recognize and empha- 
size the values of wide participation. In the formulation of guides 
which will affect employees, for example, participation is not a matter 
of command attendance at discussions or of pulling ideas from lower 
echelons to a point of top decision. It involves a maximum degree of 
free give-and-take. Through the checks and balances of democratic 
processes relevant knowledge and relevant facts are given precedence 
over position or rank. 

Although the process of preparing administrative releases and se- 
curing concurrences of affected divisions is sometimes long and drawn 
out, the final product often reflects significant resolution of differing 
views. In fact, it may be said that the most important managerial 
values are achieved in the course of preparation within the several 
divisions and in the process of co-ordinating the releases with the 
affected units. The review of codes by the Office of the General Man- 
ager or the Board provides the additional value of an orderly top-level 
examination of policies, relationships, and work methods based upon 
careful staff thinking in advance of review. 

In this managerial philosophy it is logical that the staff which is 
responsible for personnel administration is also the principal advisory 
staff on matters of organization and management methods. TVA's 
goals will be accomplished only as people are motivated to contribute 
their best efforts. In many areas of administration, therefore, the Di- 
rector of Personnel and his staff occupy a role of continuing impor- 

The Office of General Manager 

As chief administrative officer, the General Manager 
must have "executive reach" over all TVA operations. On matters 
flowing upward for Board approval he must exercise final judgment 
on the adequacy of staff preparation of background materials which 
the Board must have as a basis for decisions. More specifically he must 
be in a position to assure the Board that all relevant considerations 
are reflected in the recommendations which they are asked to review 
and approve. 

On the administrative follow-through of Board-approved policies, 
he must give attention to those aspects of organization and procedure 
necessary to assure effective execution of Board policies. Thus the 
General Manager is at the communication crossroads between the 
staff and the Board. It is not the function of the General Manager to 
give orders or make operating decisions. It is his function rather to 

Administrative Foundations 47 

see that the right minds and the right information come to bear in the 
right sequence. 

In technical and professional matters related to program, the Gen- 
eral Manager must rely on the judgment of the responsible specialty 
units. In the co-ordination of these matters, and in the determination 
of over-all administrative methods, he looks to the management service 
divisions and the specialized staffs of his immediate office for appropri- 
ate review of completed staff proposals. Thus the Divisions of Per- 
sonnel, Law, Finance, and Property and Supply and the Budget and 
Information Staffs are considerably more than service arms to him and 
the line organizations — they constitute his top-level secretariat in mat- 
ters of co-ordination, research, analysis, and public relations. 

In addition to the management service divisions, the General Man- 
ager has the assistance of a Washington Representative, two Assistant 
General Managers, and one Assistant to the General Manager. Because 
TVA's headquarters are in the Valley, one of the most important 
functions of general management is that of maintaining liaison with 
the Congress and the Executive Branch. To accomplish this key func- 
tion — without which the system of decentralized administration would 
be in jeopardy — TVA maintains a small Washington office which is 
headed by a staff member with the title of Washington Representative. 
One of the Assistant General Managers heads a small staff of econo- 
mists and public administration analysts, political scientists, and plan- 
ning technicians in the Division of Regional Studies, who assist in 
the analysis of programs and handle a wide variety of special assign- 
ments requiring social science skills. The other Assistant General Man- 
ager is in charge of the day-to-day flow of work through the office 
and serves as Acting General Manager in the General Manager's 

The Board of Directors 

The TVA Act empowers the Board of Directors to 
". . . direct the exercise of all the powers of the Corporation." Under 
the discretion vested in the Board by the Act, it (1) establishes gen- 
eral policies and programs; (2) fixes the basic organization through 
which programs and policies are executed; (3) reviews progress and 
results; and (4) approves the annual budget, annual programs and 
projects, and individual actions of major importance. The Board of 
Directors meets as a body to carry out these responsibilities, but its 
members spend most of their time individually analyzing and reflecting 
upon matters which require Board attention. 

48 Twenty Years of TVA 

By custom, the Board of Directors exercises its powers in three 
types of meetings. These meetings are scheduled by the General Man- 
ager and are normally held in his office. First is the formal meeting, 
where the Board gives official consideration to matters requiring its 
attention. The Board is previously informed by the General Manager 
on all items to be presented. Many of these items will have been in- 
formally discussed previously and background files on all will have 
been circulated prior to the meeting. The Board minutes stand as the 
official record of actions taken. They are kept by the General Counsel, 
who is also secretary to the Corporation. The second type of meeting 
is informal in character. It often follows immediately after the formal 
meeting. It is reserved for discussions of problems which can best be 
explored in an atmosphere of easy give-and-take between the Board 
and major members of the staff. The executive meeting is the third 
type. This is a closed meeting, attended by the Board of Directors, the 
General Counsel, the General Manager, and the staff members con- 
cerned with the particular topic to be considered. It is reserved for 
discussion of matters in which because of urgency or specialized sub- 
ject matter there is either no opportunity or no need to get the whole 
staff together. 

As a matter of practice, the Board lays much more stress on arriving 
at consensus than on casting votes. The fact is that there has not been 
a division in a formal vote of the Board for the past ten years. If con- 
sensus is not easily reached on a particular item, it is laid aside for 
further staff work and is held until a clear and unanimous conclusion 
is reached. All members of the Board are equally responsible for 
actions of the Corporation, but the Chairman is the official spokesman 
where one is called for. Signing important mail and testifying before 
the Bureau of the Budget, committees of Congress, and other similar 
official groups are examples. In all such representations the Chairman 
of the Board is extremely careful to make sure that he is reflecting 
clearly defined Board policy. Responses to questions raised in corre- 
spondence and in Congressional or other hearings have sometimes 
had to be deferred until the Board has fully explored the questions 
raised and reached consensus on its position. 

Board meetings are attended by the General Manager, the Assistant 
General Managers, the Chief Budget Officer, the Assistant to the Gen- 
eral Manager, the Director of Information, the General Counsel and 
Secretary to the Corporation, the Solicitor, an Assistant Secretary to 
the Corporation, and the heads of operating offices and divisions. In 
addition, if an officer feels that he should have the advice of one 
or more of his staff on an item on the agenda, he invites this person 

Administrative Foundations 49 

or persons. The operating heads are present by virtue of their program 
responsibilities. Their function is to present and defend plans for the 
program areas over which they preside. The active part taken by 
principal staff members in the meetings of the Board is another expres- 
sion, at the highest policy level, of the importance placed upon demo- 
cratic participation in arriving at basic decisions. Here the division 
and office directors have the opportunity — and the challenge — to report 
their experiences and present their ideas directly to the head of the 
agency. At the same time the head — the Board of Directors — has a 
chance to appraise the capacities of its principal staff members and 
the quality of the work they do. The mutual respect and confidence 
consequent on this procedure go far toward explaining the high 
spirit which pervades the TVA organization. 

Chapter 4 

Personnel Administration 

By Harry L. Case 

The Role of Management in Administration 

In broadest terms the function of the Tennessee Val- 
ley Authority is the integrated development of the natural resources 
of the region, built around basic programs in flood control, navigation, 
and the production of power. Such activities as budgeting, accounting, 
property management, and personnel administration are the "tools" 
of administration, in a different category from the functions or goals 
of the agency. They are, nevertheless, very important, for they provide 
the facilities and procedures by which the program administrators 
are enabled to pursue their duties in an orderly and systematic man- 

It is sometimes difficult, in public agencies in particular, to main- 
tain the program objectives and the "management tools" in proper 
perspective. This may be because the public agency is not exactly 
sure of its mission. By contrast, the budget officers and personnel ad- 
ministrators are likely to know clearly enough what their job is and 
how to go about doing it. In the absence of clear-cut major program 
definitions, the management men may tend to take over a dispropor- 
tionate influence in the organization. Or it may be because of the 
legislature's sometimes detailed inquiries into administration. In the 
atmosphere engendered by detailed scrutiny by the legislature those 
responsible for the agency set up detailed records and institute care- 
fully devised procedures and checks to make certain that things are 
kept in readiness for "investigations." This may push those responsible 
for management controls and procedures to the fore and give them 
more prestige and power than the program administrators themselves. 

For these reasons, among others, public agencies tend to be overly 
conscious of the methods and systems of control in general manage- 
ment and often not conscious enough of the basic purposes for which 
the agencies were initially established. Those responsible for adminis- 
tration in the TVA recognize this danger, and consciously and con- 
sistently emphasize program goals. Thus the "staff agencies" are never 


Personnel Administration 51 

allowed to get out of hand, but are kept in their proper positions 
behind the program (line) divisions. One very interesting conse- 
quence of this policy is that, to some, the TVA may appear to be 
under-administered, since administration Js dece ntralized among the 
divisions to a very high degree and since, as a corollary, the agency 
boasts no great superstructure of administrative paraphernalia. The 
atmosphere which prevails is not one of suspicion of administration, 
but rather one of conviction that the divisions can and will handle 
the details of administration to best advantage if they are made di- 
rectly responsible for them as an integral part of getting the program 
jobs done. 

Notwithstanding TVA's system of decentralized administration, the 
agency does of course maintain the customary organizations of general 
management: Division of Finance, Division of Personnel, Division 
of Law, Division of Property and Supply, Budget Staff, and Infor- 
mation Staff. Such auxiliary or service agencies perform several im- 
portant functions. First, they provide certain essential services eco- 
nomically, such as the purchase of supplies and equipment, the 
examination of applications for employment, the provision and main- 
tenance of the automotive fleet, and the like. These things, by their 
nature, can be done more economically through central management 
than if they were decentralized to the individual divisions. The cen- 
tralized units avoid duplication of specialized facilities and personnel. 

Second, they advise the Board and General Manager on the re- 
quirements of statutes, regulations, and executive orders which apply 
to the agency. The members of the legal staff, personnel staff, finance 
staff, and property and supply staff are specialists in their respective 
fields, and they can give assurance to the Board of Directors that it is 
not getting out of line with respect to any established public policies. 
This is a very important function. 

Third, they give specialized professional advice to the operating 
people. An operating man will often want to know what will be the 
consequence of such and such an action; the management service 
staffs are trained to provide answers to such questions. 

Fourth, and perhaps most important, the management service 
staffs assist the administrators of the agency in being self-conscious 
about what it is doing. They think about the broad plan, the broad 
methods of the organization. They help the head of the organization 
analyze its experience, judge how well it is doing its job, and look 
ahead and see what should be done and what should be avoided. It is 
clear that the services rendered by the management divisions are none 
the less important because ancillary. Their proper functioning is es- 

52 Twenty Years of TVA 

sential to the smooth running of the program divisions, and indeed 
of the whole organization. Prominent among the management services 
is personnel administration. 

TVA and the "Merit System" 

The act which created the Tennessee Valley Author- 
ity is nothing short of historic in terms of its significance for public 
administration in this country. Its provisions on the subject of person- 
nel administration are few but important. Section 3 reads, in part: 

The board shall without regard to the provisions of Civil Service laws 
applicable to officers and employees of the United States, appoint such 
managers, assistant managers, officers, employees, attorneys, and agents, 
as are necessary for the transaction of its business, fix their compensation, 
define their duties, require bonds of such of them as the board may desig- 
nate, and provide a system of organization to fix responsibility and promote 
efficiency. Any appointee of the board may be removed in the discretion 
of the board. No regular officer or employee of the Corporation shall 
receive a salary in excess of that received by the members of the board. 
[The salary of the members of the Board, set in the act at $10,000 a year, 
is now $15,000.] 

Section 6 also bears on personnel. It reads: 

In the appointment of officials and the selection of employees for said 
Corporation, and in the promotion of any such employees or officials, no 
political test or qualification shall be permitted or given consideration, 
but all such appointments and promotions shall be given and made on the 
basis of merit and efficiency. Any member of said board who is found by 
the President of the United States to be guilty of a violation of this section 
shall be removed from office by the President of the United States, and 
any appointee of said board who is found by the board to be guilty of a 
violation of this section shall be removed from office by said board. 

In only one other place does the act refer to the problem of personnel. 
Section 2 (h) contains this highly significant sentence: "All members 
of the board shall be persons who profess a belief in the feasibility 
and wisdom of this Act." 

Apart from the TVA Act certain Congressional statutes and ex- 
ecutive orders concerning personnel are applicable to TVA as to all 
federal agencies. Chief among these is the Veterans' Preference Act, 
under which the TVA is required to give a measure of preference to 
veterans over non-veterans in both appointments and terminations. 
TVA also is required to refuse to employ anyone who is a member 

Personnel Administration 53 

of the Communist Party or of any organization which advocates over- 
throw of the government of the United States by force or violence. 
Again, the agency is required by law to terminate any employee who 
participates in a strike against the government of the United States. 
These are the principal general statutes which directly affect personnel 
practice in TVA. Occasional personnel riders to appropriation acts 
have their immediate effects, but~such riders~normally are temporary, 
and so are not significant in terms of long-range policy. Finally, various 
executive orders influence federal personnel practice. The most im- 
portant of these is the executive order which established the loyalty 
program in the federal service. In net effect, these several statutes and 
executive orders influence TVA personnel administration in a number 
of important ways, but they do not destroy or even drastically 
modify the spirit of the TVA Act of 1933. 

That act set forth a charter of personnel administration for a pub- 
lic agency which was (and remains) quite original. The soil from 
which the civil service reform movement sprang was steeped in parti- 
san politics in the worst sense of the term, and it was conceived to be 
the task of the reform leaders to devise a system that would make 
impossible the systematic raiding of the public service after every 
election. The point of departure for the Civil Service Act of 1883 
(Pendleton Act) was the assumption that appointing officials are 
rankly partisan at best, at worst downright dishonest — and the body 
of evidence available seemed to provide some basis in fact for that 
suspicion. Hence the first federal civil service act of general appli- 
cation was repressive in character; it emphasized the negative, re- 
strictive aspects of the "merit system;" its principal concern was to 
make it impossible for appointing officers to hire or to discharge em- 
ployees from purely partisan considerations. In harmony with this 
spirit, virtually all control over personnel was taken from the heads 
of the operating departments and vested in a separate and "independ- 
ent" commission appointed by the President. In time merit principles 
came to be associated with the system prescribed by the Pendleton 
Act and its successors, so that a particular personnel program was 
measured against federal practice as a yardstick. The time came when 
the federal model three-man commission was reckoned as the sine qua 
non of sound personnel practice. 

The TVA Act constituted an implicit challenge to traditional 
thinking about personnel administration, for it rested upon an entirely 
different set of premises from those usually accepted. The tacit as- 
sumption in the TVA Act was that a public official normally pre- 
fers to do an honest job, and that the way to obtain competence in 

54 Twenty Years of TVA 

the public service is to select men of integrity for the highest positions 
and then to vest in them complete responsibility for achieving results. 
As regards personnel administration, this entails the provision of tools 
rather than the stipulation of detailed limitations on action; it in- 
volves emphasis on the positive rather than the negative aspects of 
personnel practice; it implies confidence in and respect for public 
officials rather than suspicion and distrust. This attitude toward public 
personnel administration has gained wide acceptance in recent years 
among students of public personnel administration, although it is far 
from having been generally adopted in practice. 

The service performed for personnel administration by the Act 
of 1933, as it has worked out, is that it made it possible for men to per- 
ceive that there can be a merit system without the spirit of suspicion 
and the cumbersome machinery which characterized public personnel 
at that time. Senator George Norris once said, 'The TVA is the only 
organization in the government of the United States that has a civil 
service running from top to bottom." Senator Norris alluded not only 
to the technical aspects of the agency's personnel system, but also to 
the quality of leadership at the top. The only qualification specified 
by Congress for appointees to the Board of Directors is that they 
". . . shall be persons who [believe] in the feasibility and wisdom 
of this Act." One of the things in the Act that they must subscribe to 
is the provision that all appointments shall be made on the basis of 
merit and efficiency. It is reflective of the spirit of the whole enterprise 
that the Board and its individual members have stood steadfast in 
their support of the merit system prescribed in the Act. 

The proof of the Act is to be found in the results obtained under 
its administration. Testimony from two sources will prove of interest 
in this connection. On one occasion Senator Kenneth McKellar com- 
plained that he had not been able to place a single one of his numer- 
ous nominees on the TVA payroll — not one, the Senator added em- 
phatically. On another, Senator Lister Hill of Alabama said: "If I 
have ever had any say, or if any other Senator, or any Member of 
Congress, or any politician in the Government or out of the Govern- 
ment has had any say in the naming of a single appointee of the 
Tennessee Valley Authority, I certainly have never heard of such a 
case. Appointments in the Tennessee Valley have been entirely free 
of any political consideration or any political test whatever." 1 TVA 
has, indeed, been deaf to all political endorsements (of which it has 

1 Congressional Record, 78th Cong., 1st sess., vol. 89, pt. 4 (June 14, 1943), 

Personnel Administration 55 

received decreasing numbers with the passing of the years), and has 
made all of its appointments instead on the basis of merit and ef- 
ficiency, as the Act of 1933 provides it should. 

Decentralization of Responsibility for Personnel 

Under the system which prevails in TVA, responsibil- 
ity for personnel administration lies with the individual administrator 
at all levels. Four points will indicate how this decentralization works 
in practice. In the first place, responsibility for making selections for 
appointments rests on the supervisor. The Division of Personnel re- 
ceives and solicits applications; it rates them; it gets the reference let- 
ters and other needed information and then it certifies to the super- 
visor a list of qualified people. Subject to some limitations required 
by the Veterans' Preference Act, the supervisor may select any person 
on the list that he thinks is best qualified to do his job. If he does not 
think there is anybody on the list who is qualified for his job, he may 
say, "You haven't got what I'm looking for. Go out and find some 
new applicants." It is the job of the Personnel Division to search 
until it has found the man who fully meets the requirements of the 
supervisor for the particular job at hand, if this is possible. The indi- 
vidual supervisor thus has a very large measure of discretion. He has 
to make the judgment, and he cannot shift the blame if he does not 
get a competent appointee. He cannot blame the Personnel Division; 
he cannot blame some commission. He has the responsibility, and he 
has to make good. His judgment must be intelligent and responsible. 
This is a very important point, but one which is commonly missed in 
administration, particularly in the public service, where it is often 
extremely difficult to fix final responsibility for getting a job done. 

A second point regarding the responsibility of the supervisor re- 
lates to the handling of grievances or complaints. It is common in 
the public service to provide that if an employee does not like an 
action taken by his superior he may carry an appeal either to a civil 
service commission or to some special board. TVA has an appeals 
procedure, but it starts with the supervisor, going from him to his 
superior and from there to the head of the division. The employee 
may appeal on most matters to the Director of Personnel, who is the 
representative of the General Manager on grievance matters, and fi- 
nally to an impartial arbitrator. But the important point is that here 
again the supervisor is the responsible official. He must stand up for 
his decisions, or if he finds a decision wrong on the basis of informa- 

56 Twenty Years of TVA 

tion developed in an appeal, he must change it. The individual 
supervisor must live with his people. He must face up to their com- 
plaints; he must stand by his decisions if they are sound, and he must 
be willing to change them if they are shown to be in error. The 
supervisor must accept responsibility and must act in a fully re- 
sponsible manner. 

Third, in order to permit a supervisor to accept those responsi- 
bilities, management must be sure that the supervisor has adequate 
information. A studied effort is made to provide the supervisor with 
full information about the policies and the program of TVA, so that 
in his relations with his subordinates he can act intelligently. This 
calls for a comprehensive system of transmitting information — written 
information, oral information, conferences, and committee meetings. 

Fourth, the emphasis in management's approach to the supervisor 
is on education rather than control. Every new administrative situ- 
ation, whether it be a grievance, an announcement of a change in 
policy, or a conference with employee representatives, is used as an 
occasion to develop the competence of the supervisor. In addition, 
formal training programs help the supervisors to become better quali- 
fied to exercise their important responsibilities. 

It is not the intention here to suggest that all these goals have been 
achieved, or that progress toward their realization has been uniform. 
The principles enunciated characterize a system toward which TVA 
is bending its efforts, but as always obstacles lie in the path of progress. 
TVA's complex program, its variety in types of employment, its ex- 
tensive geographical spread — these are some of the factors which com- 
plicate the problem of personnel administration for TVA. On the one 
hand they combine to make a high degree of decentralization neces- 
sary, while on the other they render such decentralization difficult to 
make effective. In particular, they multiply the problems of internal 
communication, on which effective decentralization depends. The dif- 
ficulties encountered must not be allowed to obscure either the goal 
or the substantial progress which has been made toward its achieve- 
ment. TVA is firmly committed to the policy of decentralized person- 
nel administration under central staff guidance. 

Employee Participation in Personnel Administra- 

TVA is an employer of four distinct types of service. 
In the first place, it is a typical government employer in the sense 
that it has on its payrolls professional foresters, agriculturists, ac- 

Personnel Administration 57 

countants, chemists, chemical engineers, clerks, and so on. In the 
second place, it is a manufacturing industry. It operates a fertilizer 
manufacturing plant at Muscle Shoals which is like many other typical 
modern chemical plants. In the third place, it is the largest electric 
utility in the country. It operates hydroelectric systems and steam 
generating facilities, and it maintains transmission lines and substa- 
tions. It therefore has most of the types of employment found in the 
typical public utility. In the fourth place, it is a construction organi- 
zation. It builds dams, steam plants, transmission lines, substations, 
laboratories, warehouses, with its own organization and its own em- 
ployees. The agency thus has a very wide range in types of employ- 
ment, and there are few kinds of personnel experience that do not 
come to its Personnel Division in managing such a variegated system. 

Employees at present number about 21,000. Of these, about 8,000 
are employed IrI~coirislruHTon7 and approximately 6,000 in operations 
and maintenance; some 7,200 are what are called salary policy em- 
ployees, i.e., clerical, professional, and administrative employees. The 
peak figure was reached in 1942, when during war-time construction 
activities the number of employees climbed to 42,000. 

The TVA was organized in 1933. In 1935 the Wagner Act was 
passed, which declared a national policy on labor-management rela- 
tions and set forth the right of the employees of industry to organize 
into unions and to designate representatives for bargaining with their 
employers. There had of course been both unions and collective bar- 
gaining before 1933, but there is no doubt that the Wagner Act gave 
a great impetus to unionization of employees and to the processes 
of collective bargaining. 

Throughout the country's history the prevailing theory has been 
that the public service is different from private employment in matters 
of labor policy. Although the right of employees to organize and 
negotiate with management in private industry has been firmly estab- 
lished by the Wagner Act and later Congressional policy, employees 
of public agencies are thought not to have any such clear-cut rights. 
Many lawyers maintain that the government cannot surrender its 
sovereignty by agreeing to negotiate with its employees. Practice in 
the public service thus generally is quite different from that in private 
industry with respect to the right of employees to deal in an organized 
way with the management. 

The TVA took a courageous stand in 1935 in adopting a declara- 
tion of labor policy which set TVA in the pattern of industrial em- 
ployee relations. This statement was written into the Employee Rela- 
tionship Policy which was issued in 1935. It said: 

58 Twenty Years of TVA 

For the purposes of collective bargaining and employee management co- 
operation, employees of TVA shall have the right to organize and desig- 
nate representatives of their own choosing. 

A forward-looking statement of policy then, it remains forward-looking 
even now. Undoubtedly, the TVA Board was influenced by the think- 
ing which was going into the writing of the Wagner Act at that time 
and by the general state of the public mind on the question of organi- 
zation of employees. In any case, the Board believed that democracy 
in the relations between the management and the employees of an 
organization requires that employees have the right to designate their 
own representatives; and that there is no difference between the 
public service and private industry in the manner in which the ob- 
jective of democratic representation of the employees is achieved. 

TVA began to bargain collectively with the representatives of its 
trades and labor employees as early as 1935. By trades and labor em- 
ployees are meant those who are engaged in construction, operation, 
and maintenance work. They were represented, for the most part, by 
the building trades unions in the American Federation of Labor, such 
as the carpenters' union, the steamfitters' union, the iron workers' 
union, and so on. In 1940 the relationship was formalized by the 
signing of the General Agreement between the Tennessee Valley 
Trades and Labor Council and the TVA. The Tennessee Valley 
Trades and Labor Council is an organization of 15 AFL unions which 
was organized for the purposes of bargaining and conducting other 
formal relations with TVA. The Agreement was signed by the fifteen 
international representatives of the unions as authorized by the presi- 
dents of those unions and by management representatives of the TVA. 
It is a binding agreement between the management of TVA and its 
employees as represented by their unions. 

The principal negotiating event between TVA and the Council is 
the annual wage conference. The TVA Act requires that "laborers 
and mechanics," i.e., those now called the trades and labor employees, 
shall be paid the rates of pay which prevail in the vicinity, with due 
regard to rates secured through collective bargaining. In order to 
carry out this provision of the Act, the annual wage conference was 
developed. At this conference the unions present their requests for 
wages based upon what they judge to be prevailing rates in the 
vicinity. Included in the "vicinity" are the cities of Memphis, Atlanta, 
Birmingham, Louisville, and Nashville, as well as the immediate Val- 
ley in which TVA is located. TVA conducts a survey of prevailing 
wages as reported by employers and local unions, and the two parties 
then get together to argue the facts. First, differences as to what the 

Personnel Administration 59 

facts are must be reconciled. That is done through a joint committee, 
and it is not too difficult. Then comes the question as to what the 
facts add up to for determining a uniform rate for the entire vicinity. 
Here is where negotiations begin in earnest. They usually go on for 
about a week. 

As a result of these negotiations, the conference agrees upon a 
set of rates which upon Board approval go into effect on the first of 
January and remain effective for one year. It happens that every year 
since the first conference the general trend of the price index has 
been up; the general trend of wages in the vicinity has been up; and 
so wage increases have been made every year, sometimes very small, 
sometimes quite large, depending upon general economic conditions. 

The salary policy employees also have their own organizations, 
some of them called unions, others called associations. The profes- 
sional employees are members of TVA employee associations: the 
TVA Engineers Association and the Association of Professional Chem- 
ists and Chemical Engineers. These are not affiliated with any national 
unions. The clerical workers are members of the Office Employees In- 
ternational Union, which is affiliated with the AFL. Likewise, the 
building and maintenance workers and the public safety officers are 
members of unions which are affiliated with the American Federation 
of Labor. These various white-collar organizations are associated in 
the Salary Policy Employee Panel. In 1950 the Panel and TVA ne- 
gotiated an agreement, The Articles 0/ Agreement between the Ten- 
nessee Valley Authority and the Salary Policy Employee Panel. After 
this agreement had been adopted, the parties negotiated a new salary 
policy which resembles the policy which applies to the trades and 
labor employees. Thus the pay of the "white collar" employees is 
now based on the rates of pay which prevail in the vicinity, and TVA 
conducts a survey something like the trades and labor survey to assist 
in determining such rates of pay. That also is scheduled on an annual 
basis. Prior to this agreement the pay of salary policy employees was 
set on substantially the same basis as the pay of employees in the Civil 

In addition to collective bargaining on salaries and working con- 
ditions, the relations with the organized employees in TVA are im- 
portant in the area of what is called "co-operation." One important 
piece of machinery is the so-called union-management co-operative 
committee and co-operative conference plan. These committees and 
conferences, which are organized at local jobs, are made up of repre- 
sentatives of the employees (designated through their unions) and of 
the local management. The committees serve trades and labor em- 

60 Twenty Years of TVA 

ployees; the conferences serve the white collar group. They concern 
themselves with questions of employee information, safety, economy 
and efficiency on the job, elimination of waste, and improvement of 
conditions of work. The committees and conferences ordinarily meet 
once a month, and they have regular agenda for taking up these 

Apart from the specific accomplishments which these committees 
and conferences are able to achieve, they have a very real value in 
promoting harmony on the job and in giving to the rank and file of 
the employees assurance that the things they are thinking about will 
be considered by the management. The very existence of the com- 
mittees and conferences gives assurance to employees that manage- 
ment values the ideas of every worker in getting the TVA job done. 

Another area where the unions and management co-operate ex- 
tensively is training. TVA has a nationally famous record on ap- 
prenticeship training in the crafts, and this program is carried out in 
full co-operation with the unions. About a thousand apprentices have 
graduated from this program. The unions also participate in the 
training of operators in the power plants and in the chemical plants. 
Without such employee co-operation it is highly doubtful that TVA 
would have been able to meet the demands of training for its rapidly 
expanding utility system. 

A third area of co-operation is that of job classification. In the 
trades and labor setup is the Joint Classification Committee, made 
up of equal representation from labor and management. This com- 
mittee must pass upon the creation of new job titles and must de- 
termine the appropriate grade in the operating schedules. This grade 
assignment determines the salary which will apply to the job. Sim- 
ilarly, for white collar positions, the Salary Policy Employee Panel 
shares responsibility for the adoption of class specifications. 

In terms of traditional thinking about personnel administration, 
TVA relies very heavily on employee contributions in some areas 
which by long usage have been reserved to management. In evaluat- 
ing TVA's system of employee participation in administration, the in- 
terests of two principal parties appear paramount: the government, 
represented by TVA management, and the employees. On the one 
hand, TVA has never found occasion for disappointment in employee 
reaction, for in every major test the employees through their unions 
have conducted themselves in a wholly responsible manner. TVA 
management has found in the accumulated wisdom and group con- 
science of its employees an important source of institutional strength. 
Far from undermining management's "authority," the system of shared 

Personnel Administration 61 

responsibility brings to bear on agency problems a combined energy, 
imagination, and good will which could be commanded in no other 

As regards the employees, the system might be expected to find 
reflection in the attitude of the workers toward their jobs: toward the 
work they are doing, toward their ''boss." In this connection, the 
testimony offered by John Gunther is instructive: 

The greatest thing about 1 TVA is . . . morale. Never in the United 
States or abroad have I encountered anything more striking than the faith 
its men have in their work. To explain this, we may list several factors: 

(1) The quality of personnel is very high. TVA picks its employees 
with as scrupulous care as any corporation. . . . 

(3) . . . TVA is very big; also it is very small, in that every unit has its 
roots in the immediate local problem. Americans . . . appreciate having 
things close to home. TVA is run by men actually in the field and on the 

(4) . . . TVA . . . doesn't threaten anybody. There is no attempt 
to dominate. . . . Men and nature work together; so do government and 
private property. 

(5) No politics. . . . All TVA appointments are on the exclusive basis 
of merit and experience. . . . 

(6). . . . People are happy because they are doing something creative, 
something bigger than themselves. You cannot legislate morale; you can- 
not impose from above the kind of loyalty TVA gets from almost every 
worker. 2 

2 John Gunther, The Story of TVA (New York: Harper & Brothers, 1951) p. 8. 

Chapter 5 

Financial Administration 

By John H. Clark 

1he term "financial administration" varies in scope 
and meaning with the context within which it is used. Here it is 
employed to cover principally the processes of budgeting and ac- 
counting, which might well have been treated separately but which 
are bracketed for present purposes because they represent a con- 
tinuum in TVA's system of financial control: in TVA usage, they are 
complementary processes which fit naturally together. In addition, 
the related subjects of procurement, transportation, and office serv- 
ices are discussed here. 

Background of the Financial Control System 

A financial control system must of course be designed 
to fit the programs for which it is to be used. The TVA program in- 
cludes a large power operation. Budgeting and accounting for a power 
operation involve all the specialized problems related to public utility 
accounting and finance generally. The TVA program also includes 
very large construction activities. There are now under way twenty 
major projects which will cost approximately $1,100,000,000 when 
completed. Budgeting and accounting for these projects require the 
many cost accounting techniques that are peculiar to the construction 
industry. The fertilizer program includes the operation of a plant 
which produces some $20,000,000 worth of chemical products each 
year. Budgeting and accounting for this operation involve process 
cost problems much like those confronting any private chemical pro- 
ducer. TVA's program also covers a number of other activities, such 
as agriculture, forestry, recreation, and the like, which are more usual 
governmental functions. For these activities the budget and accounting 
problems are perhaps more like those found in other government 

Adding to the complexity of the fiscal control setting is the diver- 


Financial Administration 63 

sity of TVA's financial arrangements. The A ct of 1933 permits d ie 
agency to use its own re venues (obta ined largely from the sale of 
power and fertilizer) to conduc t certain kinds of operation s. In this 
respecTTVA's financing is similar to that of a private corporation. 
Many impo rtant progra ms, however, falling under the head of more 
"normal" government activities, are financed by federal appropria- 
tions. It is necessary to bear in mind TVA's dual status in analyzing 
its financial system. 

The financial control system of TVA could have been designed to 
emphasize at least four different things. First, it could have empha- 
sized organizational units. The budget and accounting systems of 
many federal agencies are so designed. A second point of emphasis 
could have been the objects of expenditure: personal services, travel, 
materials and supplies, equipment, communication service, and the 
like. Some of the financial control systems of other federal agencies 
give more emphasis to these items than does TVA's system. A third 
alternative calls for emphasizing expenditures by funds. (A fund is a 
sum of money earmarked for a particular purpose or objective, usually 
prescribed by law. TVA has two funds: appropriated and corporate.) 
In the financial systems of many states and municipalities the fund 
concept enjoys the major emphasis. The fourth — and to TVA by far 
the most important — is a financial system designed in terms of pro- 

The whole TVA budget and accounting system is based funda- 
mental ly on a program approach . This means that the system gives 
first attention to whether moneys are to be spent for power operations, 
fertilizer research, agricultural development, and the like, rather than 
to whether the moneys are to be spent (a) by a particular unit or 
organization, (b) for personal services or for materials and supplies, 
or (c) from one fund or another. The advantage of this approach is 
that attention is focused upon the character and relative importance 
of the work to be done or upon the service to be rendered rather 
than on things to be acquired. The latter items are, after all, only the 
means to an end. The all-important thing in budgeting is the work 
to be accomplished and what the work will cost. Another advantage is 
the separation of capital outlays from cu rrent operating e xpenses. It 
is of obvious importance~to~ distinguish between a million dollars be- 
ing spent, say, on a dam which will last one hundred years and the 
same amount spent for operating expenses. The program approach 
which TVA is using and has used for a good many years follows the 
pattern recommended by the Hoover Commission under the name of 
"performance budgeting." At the same time TVA's system, though 

64 Twenty Years of TVA 

emphasizing program, is also designed to accumulate and report costs 
for both budget and accounting purposes on the other three bases 
mentioned. The backbone and common denominator of TVA's 
budget and accounting is the "activity accounting" concept, which 
will be discussed in some detail later. 

The Budget System 

The budget in TVA serves two primary purposes. 
First, it serves as a device whereby the people responsible for carrying 
out the programs can plan their operations both from a program and 
from a financial point of view. It provides them with an opportunity 
to review plans and results with their own staff. It also provides the 
major device by which central management plans the programs in 
conjunction with the responsible operating officials. Second, the 
budget is the basis upon which TVA secures appropriations from the 
Congress and reports to the President and the Congress on its plans 
and accomplishments. 

The step-by-step process by which TVA's budget is made does not 
require detailed analysis here. The accompanying chart, titled "TVA 
— The Budget Cycle," outlines the budgetary procedure in calendar 
form, indicating both the major steps taken and the time fixed for 
each. The making of the budget involves the familiar stages of pre- 
liminary estimates of program needs; consolidation of program esti- 
mates into agency (Board of Directors) estimates; submission of the pro- 
posed budget to the Bureau of the Budget; hearings by the Bureau, 
during which TVA spokesmen are invited to explain and defend their 
requests; incorporation of the TVA budget into the President's budget, 
a much larger and broader document; and consideration by the Con- 
gress, and, ultimately, passing by that body of the necessary appropria- 
tion bill. Note that the process of budget formation gets under way 
seventeen months before the beginning of the fiscal year. The chart 
does not show that, while the fiscal year begins July 1, action on the 
appropriation bill normally is not completed until well into July, 
and sometimes not until the first half of August. 

Certain features of TVA's budget system are worthy of special 
mention. First, the making of a budget begins with a systematic re- 
view of major policies. The budget for fiscal year 1954 had its be- 
ginning back in February 1952, when all operating divisions were 
asked to submit a list of major policy questions which in their opinion 
required attention in connection with preparation of the 1954 budget. 
From February until May these questions were discussed, and one by 
one the answers emerged. The issues raised for discussion are very 

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66 Twenty Years of TVA 

broad; they turn on questions of policy rather than on number of 
dollars required. The major policy review is, in a sense, prebudgetary, 
though it leads directly into the initial estimates stage. 

Second, the budget gives primary attention to programs, as has 
been noted: it is, in all important respects, a "performance" budget. 
Third, budgetary practice fits into the TVA pattern of decentralized 
administration no less than does personnel practice examined earlier. 
It places maximum responsibility for budget formulation, execution, 
and control on operating officials. Such decentralization is of para- 
mount importance with respect to the purpose of internal program 
planning. The budget builds upon estimates which^come Jrom the 
operating level up to management, rather than being determined at 
the top by high executives. Operating officials thus are responsible for 
developing both work plans and fiscal estimates for their own pro- 
grams. In carrying out the adopted budget, they are given wide lati- 
tude with respect to program and operating details, but are of course 
expected to perform their work in general conformance with approved 
budget plans. 

Fourth, the TVA l^dge^is^n^tedjis an integral pa rt of the Presi- 
dent's budget for the total government of iheJUnhgd^Jjtates. TVA's 
r6le in the budget-making process, and its relation to the established 
federal budgetary procedure as well, is generally analogous to those 
of the Interstate Commerce Commission and the United States De- 
partment of Agriculture, as two examples. The means by which the 
TVA budget is integrated into the total federal budget are, briefly, 
these: (1) the proposed budget is drafted under general guidance 
from the Bureau of the Budget on Presidential budget policy; (2) it 
is submitted to the Bureau for its consideration, and is explained, 
argued, and defended there; (3) it is assimilated to the President's 
budget, and is dependent on the President for submission to the Con- 
gress; (4) it runs the gamut of committee hearings in both House 
and Senate; and (5) the TVA is dependent on an annual appropria- 
tion act passed by the Congress and signed by the President. 

Fifth, TVA's budget and accounting procedures are tied together 
in a single, integrated system of financial control, as will appear more 
clearly from an examination of the accounting system. 

The Accounting System 

TVA's accounting system has two primary purposes. It 
serves to report to the Congress, to the executive branch of the gov- 
ernment, and to the public at large on the financial results of TVA's 

Financial Administration 67 

operations; and it provides aid to TVA management at all levels of 
operation in the financial administration of its programs. 

Financial Reporting 

Reports on the financial results of TVA's operations 
assume two principal forms. First, there are the published financial 
statements, which are issued by the Comptroller each year in much 
the same form as corporate annual reports. A good bit more detail is 
given in the TVA reports than in the ordinary corporate report to 
stockholders. These reports receive a rather wide distribution to those 
primarily interested in the corporate financial statements. Section 9 
(a) of the TVA Act requires that "the board shall file with the Presi- 
dent and with the Congress, in December of each year, a financial 
statement and a complete report as to the business of the Corporation 
covering the preceding governmental fiscal year." The published_fi- 
nancial statements are included in these annual reports. Second, the 
budget documents subm itted each year to the Bureau of the Budget 
and the Congress include fiiT^<2^L--tBle rn<ant ' 1 whir h mvf>r the elapse d 
year as well as budget estimates for the current year and the following 
year. The actual figures are taken directly from the published fi- 
nancial _statemenB'. Thus,_jhe budget reports actu al financial resul ts 
in relation to pro posed plans . 

A nu mber of criticism s have been made of TVA's accounting sys- 
tem. Most of these concern broader issues rather than technical ac- 
counting procedures, and some relate to policy laid down by Con- 
gress. There is, for example, the frequently hea rd char g e that T VA's 
financial reports do not include interest ch arg es. This is true, inas- 
much as TVA is not required by its law to pay interest and has no 
borrowing authority. TVA's earnings on power of over four per cent 
are more than enough to pay interest on all the funds invested in 
the power program; but looked at as an accounting question, TVA's 
books obviously would not include interest charges on such funds un- 
less interest were actually paid by the corporation. It is a basic ac- 
counting principle that the accounts reflect only costs incurred; it 
would be completely at odds with good accounting practice to record 
on the books, or to include in financial reports, hypothetical costs 
not actually incurred or values not actually accrued. The same criti- 
cism has b een ma de about taxes, and again the issue is one of policy 
ratheF than of technical accounting. To the extent that TVA pays 
taxes or amounts in lieu oj[ taxes, they are recorded in the accounts. 

The integrity of TVA's financial reporting to the public is best 

68 Twenty Years of TVA 

attested by expert accountants outside the TVA organization. Jfroni 
1938 through 1944, TVA 's acco unts were audited by one of thejput- 
standing firmsToF public accountants in_t he coun try. Beginning with 
fiscal year 1945, TVA (along with other governme nt agen cies) was 
prohibited from spending money for outside audits. The General 
Accounting Office has audited TVA's^accounte since the beginni ng, 
and starting in fiscal year 1945, it began a commercial-type audit in 
place of the previous more limited voucher-type review. To date, all 
the audit reports, from both GAO and private accountants, have in- 
cluded unqualified certification that TVA's financial statements pre- 
sent fairly its financial position and results of operations. The Senate 
Committee on Expenditures in the Executive Departments said of 
the GAO audits of TVA: 

From the very first report submitted by the GAO for the fiscal year 
1945, the auditors' opinions have been affirmative of the excellence of the 
fiscal management of the corporation's affairs, and there has been reported 
no single proceeding in incontrovertible violation of the law. In compari- 
son with reports of the GAO on the affairs of other governmental corpora- 
tions, this is a real tribute. With respect to each year, the corporation's own 
balance sheets and supporting statements have been found to present 
fairly the entire operations of the corporation, as reflected in accounting 
methods maintained in accordance with applicable law. 1 

T.J^oleman Andrews, then head of the Corporation Audits Divi- 
sion of GAO and later Commissioner of Internal Revenue, testified 
before a Congressional committee: 

TVA probably has the finest accounting system in the entire Government 
and probably one of the finest accounting systems in the entire world. 
It is an excellent system. There is no private enterprise in this country 
that has any better. 2 

Accounting as an Aid to Management 

For purposes of helping management do its job, a sys- 
tem of financial control must give timely answers to these questions: 
(1) For what work is the money being spent, that is, what is the cost 
of each phase of the program? (2) Who is responsible for the expendi- 
tures? (3) How does the cost to date compare with budget estimates? 
Perhaps the unique feature of TVA's accounting system is what has 

1 S. Rep. 2685, 81st Cong., 2d sess., December 20, 1950, p. 56. 
2 House Hearings on the Independent Offices Appropriation Bill for 1948, 80th 
Cong., 1st sess., Part I, pp. 39-40. 

Financial Administration 69 

been called the "activity account" concept. This approach to the re- 
cording of costs represents a bridge between technical accounting 
terminology and language which the operating man understands. It 
forms the basis for management's effective use of the accounting sys- 

The first major step in developing this concept of accounting was 
a thoroughgoing review of TVA's work in an effort to define all the 
agency's activities in terms of purposes to be accomplished. This in- 
volved a review and classification of all work to determine whether 
its purpose was navigation, flood control, forestry development, recrea- 
tion, and so on throughout the many programs carried on by the 
agency. The result of this review was a complete list of all the pro- 
grams in which TVA was engaged, which served as the basic frame- 
work for the system of account classification. 

The approach used is to break up for accounting purposes all_of 
the work done on a particular program into small parts, each of which 
represents a unit of work for which the responsible operating organiza- 
tion wisEeY to have the costs reported. To illustrate: for technical 
accounting purposes one account called "Expense of Operating Reser- 
voirs" might be entirely satisfactory, but for management purposes a 
considerable breakdown of this single item is desirable. Thus, there 
would be several hundred activity accounts included in the account- 
ant's phrase "Operation of Reservoirs," each activity account represent- 
ing a clearly defined unit of work, such as malaria control operations 
at Wilson Dam, or maintenance of roads and grounds at Pick- 
wick Dam. Budget estimates ar e also pr epared for each. "Activity ac- 
count" is the accountant's term for one of these management-desig- 
nated units of work. 

For management purposes, second in importance to the program 
emphasis in the accounts is the separation of costs by organizational 
units. Whereas the program separation answers the question "For 
what purpose was the money spent?" an organizational breakdown is 
necessary to answer the question "Who spent it?" Hence the accounts 
are set up sothatjill thejcosts for a particular operating unit may be 
distinguished and reported. The mechanics for obtaining this separa- 
tion by both program and organization are quite simple. For example, 
all the accounts in the 880 series relate to the forestry program. Within 
forestry, each organizational unit is assigned a number. Thus, number 
44 designates the Forest Development Branch. An actual account 
number might read 883-44. By accumulating all the 880 series of ac- 
counts, costs for work done in the forestry program are summarized. 
By assembling the costs reported under the symbol 44, all the work 

70 Twenty Years of TVA 

of the Forest Development Branch is accumulated. An additional 
number is used to indicate the particular activity account, such as the 
cost of seedlings grown in a forest nursery. 

At the end of each month the head of a given organizational unit 
receives a copy of the appropriate accounting ledger sheet which 
shows in detail, by nature and object of expenditure, the charges 
made against his unit during the month. The administrator also re- 
ceives monthly an organization statement which indicates amounts 
spent both by activity and by spending unit, and which compares the 
amount spent with the budget for the year. This statement has special 
utility for the administrator responsible for several operating units. 
In addition, there are monthly condensed statements by projects and 
programs which the top executives find useful in keeping abreast of 
developments in general. The monthly financial reports are thus de- 
signed to serve management at all levels. 

The point was made earlier that the budget__ancl account ing sy s- 
tems are really a single system of financial control. Taking the Clinton 
Forest Nursery Operation as an example, the superintendent of the 
nursery is responsible for preparing budget estimates for each of the 
activity accounts involved in his operation. He gets current accounting 
information to compare with those estimates. The use of a single ac- 
count classification system for both budgeting and accounting ties the 
two directly together. The amounts in the budget column of the 
monthly organization statement are derived from budget estimates 
which were prepared by the superintendent of the nursery, who is re- 
sponsible to his supervisor for carrying out the work called for in the 
budget and for keeping his expenditures within the budget amounts. 
The usefulness of having available monthly the complete cost informa- 
tion which is provided through the organization statement and the 
detail ledger sheets should be apparent. The system promotes a cost 
consciousness in the organization. A by-product value is a very thor- 
ough internal audit of each transaction, which comes about by having 
each operator check the charges made against his accounts every 

Organization for Financial Control 

The scheme of financial control in TVA falls into two 
major organizational units. Because of the relationship between the 
budget and general program and administrative planning, the budget 
work is performed_by a staff located^ in the Offi ce of the General 

Financial Administration 71 

Manager. This staff is responsible for devising and maintaining the 
system of budget control and for compiling the over-all TVA budget 
for the General Manager and the Board. As has been mentioned, the 
bulk of the budget work is done in the operating divisions, with each 
organization responsible for the preparation of its estimates and 
budget programs and for the execution of the approved budget plans. 
The role which the budget staff plays in TVA is one of review o f 
divisional budget_jriaterials for identifying major problems which 
should be brought to the attention of the General Manager and the 
Board,_and of preparation of all budget materials to be presented to 
the Bureau of the Budget and to the^Congress. 

The accounting J^hase of TVA's financial control system J^s ^en- 
tered in the Division of Finance under the directio n of th e Comp- 
troller. The major work of this division falls into three classes — 
accounting, auditing, and treasury. Because of the wide variety of 
work in which TVA is engaged, the accounting_junctio n is high ly 
decentralized. Four major accounting offices are provided: Power Ac- 
counting, in Chattanooga; Chemical Accounting, at Muscle Shoals; 
Plant Accounting, in Chattanooga; and Central Accounting, in Knox- 
ville. In addition, a temporary accounting office is established at each 
major construction project. This decentralization is desirable because 
of the specialized requirements of each of these major parts of the 
program. For example, the power accounting is done in accordance 
with the system of accounts prescribed by the Federal Power Com- 
mission for all public utilities. On the other hand, accounting in con- 
nection with the chemical program involves cost accounting techniques 
and commercial process cost work. The Plant Accounting Office main- 
tains records of completed plant and depreciation reserves and co- 
ordinates all accounting records of construction. The Central Ac- 
counting Office maintains the general accounts and performs the ac- 
counting for organizations not served by any other accounting office. 
In the Office of the Comptroller there are staffs which develop ac- 
counting procedures and methods, prescribe the basic framework of 
the system of accounts, and prepare the monthly and annual financial 
statements and reports. 

The Auditing Branch is responsible for all internal auditing. Be- 
fore disbursements are made for payroll, travel, purchases of materials 
and supplies, land, and so on, each voucher is examined to see that 
the amount is correct and that payment is due. Continuing audits are 
also made of revenues, program expenses, project costs, and systems 
of internal control. 

72 Twenty Years of TVA 

Functions of the Treasury Branch include custody and disburse- 
ment of TVA funds, designation of banks in which deposits are to be 
made, issuance of United States Savings Bonds, and review and cus- 
tody of fidelity bonds required of employees. 

General Services 

In 1952 TVA purchased some $268,000,000 worth of 
materials and equipment involving over 42,000 purchase orders and 
contracts. It acquired in fee or obtained easements on 576 tracts of land. 
In addition it obtained 833 miles of right-of-way for transmission 
lines. TVA offices required some 645,000 square feet of floor space at 
an annual rental of about three-quarters of a million dollars. TVA 
switchboards handled some 221,000 toll and leased-line telephone 
calls. Over 4,000,000 pieces of United States mail and telegrams were 
received or dispatched, and some 15,000,000 pieces of interoffice mail 
moved from one TVA office to another. A half million dollars' worth 
of paper, pencils, and other office supplies were used. It took 55,000 
pieces of office furniture to keep the agency going. The printing and 
reproduction shop handled some 15,000 jobs involving about 
31,000,000 impressions. The transportation fleet operated nine air- 
planes and 3,215 pieces of automotive equipment of one kind or an- 
other from large trucks to passenger cars. Use of this equipment added 
up to 23,000,000 miles and 667,000 hours of truck use. These figures in 
themselves are not important, but they indicate something of the 
variety and the magnitude of the general service functions. 

General services are furnished_j:o thejjperating divisions by the 
Division of Pr operty a nd Supply, which employs something over 900 
people and is organized into four major units: the Land Branch, the 
Materials BrancfrTthe Office Service Branch, and the Tmnsportation 
Branch . The Land Branch attends to the purchase and sale of land in 
behalf of TVA. Its operations are described in connection with reser- 
voir management. The other three branches handle the functions 
appropriate to their designations. Their work is the subject of this 


The Materia ls Branch i s divided into three part s: the 
Pr ocurement Sectio n, the Priorities and Analysis Sectio n, and the 
Traffic Section. The Priorities and Analysis Section is a staff unit that 
is largely concerned with materials controls and priority work with 

Financial Administration 73 

the Washington agencies in procuring materials. Their longer range, 
more normal function is the development of standard specifications 
and the improvement of procurement procedures, processes, and plan- 
ning. The Traffic Section advises the operating divisions on rates and 
routes and makes arrangements for large and unusual shipments both 
to and from TVA and within the organization. The Procurement 
Section includes the individual purchasing agents who are responsible 
for a specialized group of equipment or materials items. One unique 
feature about TVA's Procurement Section is that the purchasing 
agent has complete responsibility for the order from the time the 
requisition comes in from the operating division until the order is 
actually delivered on the job. In many companies — and TVA was set 
up in the same way until quite recently — there ^is a separate expediting 

TVA's basic procurement policy is that all materials and equip- 
ment shall be^ bought from the lowest competitive bidder offerin g 
satisfactory goods. Competition is usually secured by circulating in : 
vitations to bid to all suppliers who might be expected to bid, by 
posting notices in public places, and by publishing advertisements in 
newspapers and periodicals. The TVA Act permits purchases without 
open competition in emergencies and in purchases involving less than 
$500. Outlays involving more than $50,000 o r involving special con - 
si deration s, such as the ability of the bidder to perform, m ust r eceive 
prior approval of the Boa rd of Directors. 

An important responsibility for what is to be purchased_and for 
the basic recommendations for approval of the particular purchase 
award rests with the divisions, the Materials Branch serving as a serv- 
ice agent to build a factual basis for determination. The best source 
of fact, for example, on the operating characteristics of a generator, is 
usually the division designing it. Thus the Division of Design deter- 
mines the characteristics of a generator for a project and sends the 
specifications to the Materials Branch. The Materials Branch then 
secures bids on that kind of generator, all the while working closely 
with the Division of Design. The Division of Design makes its recom- 
mendation as to the best bid submitted. Occasionally the low bidder 
may be judged not to be the best bidder. There may be considera- 
tions of repair parts or experience and service which make the low 
bid less desirable than a higher one. When the Materials Branch 
thinks that the lowest bid is the proper bid to accept and the operating 
division does not agree, the problem goes to the General Manager for 
resolution. The Board of course has the final say, but it will rely on 
the recommendation of the General Manager normally. 

74 Twenty Years of TVA 

The purchase of coal has posed some special procurement prob- 
lems. During 1952 TVA awarded long-term contracts — some extending 
for as long as ten years — for the purchase of some 40,000,000 tons of 
coal. It is estimated that by early 1956 the steam plants will burn 
15,000,000 to 18,000,000 tons of coal a year. Consumption in such 
amounts put a severe strain on existing production facilities, and 
necessitated the development of new sources. This meant not only 
opening up new coal fields, but improving and expanding transporta- 
tion facilities to handle the increased production. TVA's long-range 
purchase contracts have played an important role in stimulating pri- 
vate initiative, including heavy investments, to meet the new demand. 
Both the U. S. Bureau of Mines and the State of Tennessee have co- 
operated in inventorying and appraising the potential production of 
new coal fields in Tennessee; the state, indeed, recently appropriated 
$200,000 for this developmental work. As may be imagined, TVA's 
greatly increased coal requirements are having a significant impact on 
the coal industry of the Valley. As a single item of interest, it is esti- 
mated that, by 1956, 10,000 miners will be employed in producing 
coal for TVA's steam plants. 

TVA has some thirty to forty warehouses scattered throughout its 
area — at various construction projects, power installations, at the 
chemical plant, and elsewhere. Obviously there is a need to be able 
to transfer material from one warehouse to another in order to keep 
inventories at satisfactory levels. Any warehouse with items that are 
moving slowly or that are actually surplus reports those items to the 
Sales and Transfer Unit of the Procurement Section. As requisitions 
come in for similar items from another point, the items that are in 
stock in some other warehouse are used. This makes possible the full 
use of existing items and avoidance of the purchase of duplicating 
stocks. If the items are surplus, the Sales and Transfer Unit makes 
arrangements to sell them. 

Office Services 

The Office Service Branch is responsible for providing 
all office space and facilities and office furniture and equipment. It 
also operates the office supply warehouses for paper, pencils, and ex- 
pendable supplies. It maintains the reproduction shops. TVA operates 
three shops — in Knoxville, Chattanooga, and Muscle Shoals — that han- 
dle a good part of its printing requirements. In general, most of the 
work is done by a duplimat or mimeograph process. The more spe- 
cialized types of printing are done outside TVA. This unit also main- 

Financial Administration 75 

tains stenographic pools. The branch further assists the operating 
divisions in maintenance of their files. 

An important staff within the Office Service Branch is the Office 
Methods Staff. This staff is responsible for the development of stand- 
ards for office equipment, supplies, and forms, and of procedures for 
files, secretarial practice, disposition of records, and the like. An ex- 
ample of the work done by this staff is found in its handling of the 
problem of files. Beginning with a single piece of paper, the TVA Act, 
in 1933, the agency has created over a period of twenty years an esti- 
mated 250,000,000 items of record. As the records become inactive they 
are placed in storage files. The file drawers holding this accumulation 
of paper if placed end to end would extend 20 miles. The Office Meth- 
ods Staff has devised a procedure for reviewing and cataloging all rec- 
ords to determine when any group can be destroyed. The current ma- 
terial is being pre-classified as to the time the material must be retained, 
subject to various legal and other requirements about the retention 
of government records. There are some individuals in the TVA that 
like to throw away everything and others that find it hard to let go of 
anything. The problem of systematizing such a quantity of records 
and making everybody happy is no small task. In 1952 TVA was the 
only agency in the government that destroyed more records than it 
created. The Office Methods Staff is also working on the use of micro- 
film for the permanent storage of records. 


The Transportation Branch operates TVA's fleet of 
nine airplanes and 3,215 pieces of automotive equipment, including 
over 700 passenger cars. TVA operations are very scattered, and a num- 
ber of dams are in mountainous areas where the most convenient way 
to travel is by car. The agency's fleet of nine airplanes is used in a 
variety of interesting ways. The spraying of the rims of the reservoirs 
for malaria control, novel when it was introduced, has become a 
routine operation; and the technique has found wide application in 
other parts of the world. Another use for the airplane is in connection 
with high-altitude topographic mapping. One of the more interesting 
applications of the helicopter is found in the patrol and inspection of 
power lines. This operation used to be conducted by foot patrol or by 
jeep; now a pilot and an observer with binoculars patrol the high- 
voltage transmission lines, making notes and reporting on places that 
need repair. Yet another of the many uses found for the airplane lies 
in the taking of coal inventories by aerial photography. A coal pile 

76 Twenty Years of TVA 

at a large steam plant is from a quarter- to a half-mile square and 
anywhere from 30 to 60 feet high. With aerial photographs, engineers 
are able to compute the amount of coal in the pile, completing in 
hours a job that used to require days by rod and transit. The method 
of aerial measurement has been found to be both more accurate and 
more economical than any other. 

The Division of Personnel, the Budget Staff, the Division of Fi- 
nance, and the Division of Property and Supply comprise, along with 
the Division of Law, the principal auxiliary arms of TVA's central 
administration. The functions they perform are not strictly speaking 
of a program character, but rather are facilitative of primary program 
ends. Their work is none the less significant because secondary, for 
they provide the methods which introduce system into administration. 
Their assumption of housekeeping responsibilities largely frees the 
program divisions to pursue the development of the Tennessee Val- 
ley's natural resources, which is the end set for TVA by the Act of 


Chapter 6 

The River Control System 

By Harry Wiersema 

Ihe system of control of the Tennessee River and its 
tributaries lies at the very heart of the TVA development program. 
The planning, design, construction, and operation of this system are 
essentially engineering problems, which require technical engineering 
skills in their solution. The importance of the river control program 
in TVA is shown by the very size of the program. Of the more than 
$1,000,000,000 which the TVA had invested in assets by 1952, nearly 
three-quarters was in the river control system. 

Some Problems in River Control 

The eastern half of the Tennessee Valley, where rivers 
flow in a general southwesterly direction, is mountainous and rugged, 
with elevations varying from as low as 600 to as high as 6,500 feet. 
The rainfall in some places in the mountains has reached as much as 
100 inches a year, but in general it averages about 50 inches. In con- 
trast, the western half of the Valley is rather rolling and low country 
with few high elevations and no mountains. The river through this 
western half is relatively slow-moving with a fall of about one foot 
to the mile, in contrast to the rivers in the eastern half which have a 
very rapid fall and runoff. This variation in physical characteristics 
had an important bearing on the planning of the entire TVA project. 
Rainfall in the Tennessee Valley does not vary greatly during the 
year. It is somewhat less in the fall months than in the winter, but 
over a period of a great many years it is fairly evenly distributed, so 
that there is little need for irrigation in the Valley. But the runoff 
from this rainfall is extremely varied. Rain that falls in the winter 
strikes ground that is sometimes frozen and always partially denuded, 
the leaves being off the deciduous trees and much of the vegetation 
dead. Consequently, the water runs off very rapidly and helps to swell 
the streams, thus producing floods. Much of the rain that falls in the 


78 Twenty Years of TVA 

summer months, by contrast, is absorbed by vegetation or is evapo- 
rated, and consequently the runoff in the summer months is generally 
low. This produces wide variations in the stream flow. Before TVA 
the lowest flows on the Tennessee went below 5,000 second-feet, 
whereas the high flows during the greatest flood approached 500,000 
second-feet. Thus, the flow of the river during high floods was as much 
as 100 times that of the lowest season. 

Although the Tennessee River (as distinguished from its upper 
tributaries) has a gradual drop for the most part, there is one point, 
at Muscle Shoals, Alabama, where in a distance of only 16 miles the 
river falls about a hundred feet. The Shoals had always been a barrier 
to navigation on the Tennessee, as had the extremes in the flow of 
the river. In addition, the higher flows created a flood hazard, and the 
cities along the river were subject to frequent and severe floods. For 
instance, in 1867 the city of Chattanooga was nearly completely in- 
undated to depths up to 15 or 20 feet. That flood, had it occurred in 
the 1940's, would have caused damages of over $100,000,000. The city 
of Chattanooga had employed engineers to devise a plan to protect 
Chattanooga from such floods, but it was impossible to achieve this 
end by local protection alone. What was needed was supplementary 
holding back of the water by means of upstream reservoirs. 

Another major problem in the development of the river lay in the 
fact that, again because of the extreme variation of flow, the pro- 
duction of hydroelectric power at single plants was not economical. 
Some hydroelectric development had been made by private interests. 
The Aluminum Company of America had built three dams, Calder- 
wood, Cheoah, and Santeetlah Dams on the Little Tennessee River, 
to produce power for the refining of aluminum at their plants in 
Alcoa. The Carolina Power and Light Company had built a hydro- 
electric plant at Waterville, North Carolina, and the Tennessee Elec- 
tric Power Company had constructed a dam at Hales Bar below 
Chattanooga, mainly to furnish power for the city of Chattanooga. 
All these developments were for power only, except that at Hales Bar 
a lock had been installed; it is now the smallest lock in the TVA sys- 
tem. The total power produced from these installations was very 
small in amount, and it was almost impossible for private interests 
to do more because of the extreme variation of flow and because of 
the magnitude of the task of equalizing the flow. 

Thus when TVA engineers arrived on the job in 1933, they were 
confronted with three major objectives. First, they had to regulate the 
river so as to eliminate the low flows of the autumn as well as the 
high flows of the winter. They set as a goal a flow of about 30,000 

The River Control System 79 

second-feet for a minimum, and a reduction in flood flows to perhaps 
half of what they were before. A second objective was to create a 
navigation channel on the river from its mouth at Paducah to Knox- 
ville. The third was to devise a plan to utilize the vast potential 
energy in the river for the generation of power. 

Multiple-Purpose Development of the River 

Here then, an opportunity was presented for the engi- 
neer to develop a river for all the purposes for which it was capable 
of being developed. Three fundamental ideas underlay this multiple- 
purpose development. The first and most important was that the re- 
sources of the river were to be developed for the benefit of all the 
people of the region — not for any one group, industry, or agency, but 
for all the people. The second basic concept was that flood control 
and navigation should be put first in importance, hydroelectric power 
second. This policy was stipulated in the TVA Act. Since a hydro- 
electric plant yields a monetary income from the sale of the power it 
produces, there is always a temptation to give priority to power; but 
in the TVA system, it was made mandatory that navigation and flood 
control be given prior consideration. The third fundamental idea was 
that the TVA was to develop all the resources of the river system, all 
its potentialities, not just for navigation, not just for flood control, not 
just for power, but for all possible purposes, remembering always that 
in the total developmental program navigation and flood control 
must jDrovTcle the twin foundations. 

The significance of the multiple-purpose concept becomes clear 
when the development of the Tennessee is contrasted with that of 
certain rivers improved to serve single purposes. Consider first the 
Miami River in Ohio. This river in 1913 caused untold damage to 
the cities of Dayton and Hamilton. Afterward the people of that area 
organized a flood control district and employed a consulting engineer, 
Dr. Arthur E. Morgan, to solve their flood problems. He planned a 
system of flood control for the Miami River which forever obviates the 
possibility of a severely damaging flood on the river, but in doing so 
he also precluded the possibility of the five dams in the system ever 
being used for any other purpose but flood control. A plaque has 
been placed on each of the five dams which reads, "The dams of the 
Miami Conservancy District are for flood protection purposes. Their 
use for power development or for storage would be a menace to the 
cities below." Critics of TVA have cited this in arguing that the TVA 
dams cannot be used for flood control and other purposes simulta- 

80 Twenty Years of TVA 

neously. The truth is, of course, that Dr. Morgan himself, who en- 
gineered the Miami Valley project, as the first Board Chairman of TVA 
was responsible for much of the engineering which resulted in TVA's 
multiple-purpose system. 

Consider next a river which has been developed for power only, 
the Coosa River in Alabama. This is a very efficient development, 
but since the dams were built for power alone, the Coosa River can- 
not economically be developed for either navigation or flood control, 
or for any other purpose. 

While there was no multiple-purpose development of an entire 
river system before TVA, there are instances of single dams which 
are multiple-purpose in character. For instance, Hoover Dam on the 
Colorado River was built not only for irrigation, power, and flood 
control, but also to regulate the flow of water below the dam. This 
stands as an instance of an isolated multiple-purpose structure. The 
Grand Coulee Dam, the largest in the world, is also a multiple-pur- 
pose dam built for irrigation, flood control, and power, but it too was 
conceived as a single project, rather than as one in a system of dams. 

The Tennessee River is the fourth largest in the United States in 
point of flow. It is exceeded by only three other rivers, the Mis- 
sissippi, the Columbia, and the Ohio. The problem of controlling 
this river, because of its very size and complexity, was too great for 
any private or local agency to undertake. There was apparently only 
one way in which this Valley could be completely developed and that 
was by a branch of the federal government having the resources to 
develop the entire Valley as a single planned development. Happily 
before TVA was organized, private exploitation of the river had not 
reached the point where it would have been impossible to proceed 
with an integrated program, as has happened on many rivers. The 
Ohio River, for instance, has been developed by the use of low naviga- 
tion dams to the extent that it would be very expensive now to 
develop that river for other purposes. 

It is easy enough, on the basis of successful experience covering a 
period of twenty years, to grasp the implications of the decision to 
build multiple-purpose dams; it was quite a different matter to com- 
prehend the problems involved in 1933. Some prominent engineers 
went so far as to characterize the scheme as visionary. Clearly, they 
maintained, it is not practicable to keep a reservoir full, which is 
desirable for power production, and at the same time empty so as to 
provide the maximum in flood protection. Power production and 
flood control are incompatible, they argued, since they require directly 
opposite management practices for the reservoir behind the dam. 

The River Control System 81 

TVA insisted from the beginning that the same space could be 
used for both purposes. The reasoning of the TVA engineers rested 
basically on the Valley's rainfall and water runoff characteristics. The 
seasonal variation, the engineers reasoned, could be utilized to equalize 
stream flow, with water being stored in the early months of the year 
and released to augment the low flows in the later months. To test 
this reasoning, records of floods over many years were analyzed. It 
was found that the big floods always came in the period between 
January and April. The record showed that there had never been a 
major flood after April 15. This suggested that if the space in the 
reservoirs could be used to catch the large floods before the fifteenth 
of April, after that date the water in the reservoirs could be utilized 
for power production for the rest of the year without reference to 
further need for flood control. Thus the same space could be used 
for both flood control and power production. 

In order for the multiple-purpose theory to work in practice, how- 
ever, there had to be very careful co-ordination of all dams, both in 
structure and in operation, throughout the Tennessee River system. 
In the eastern half of the Valley high dams were required to store 
as much water as possible. On the lower river, an option was available: 
there the dams might have been either high or low. The United 
States Corps of Engineers had devised a plan for building 32 low dams 
from the mouth of the river to Knoxville. All these would have been 
navigation dams, which with adequate locks would have created a 
navigable channel, but they would have had no value for flood con- 
trol or power. TVA decided, instead, to build high multipurpose dams 
on the main river. Already there were two high dams, the Wilson 
Dam and the Hales Bar Dam, and it was decided to complete the sys- 
tem by building additional high dams, each of which would back 
up the water to the next higher dam upstream. Kentucky Dam backs 
the water up to Pickwick and Pickwick to Wilson and Wilson to 
Wheeler and so on, each dam creating a slack-water pool, while 
navigation between pools is provided by a large lock in each dam. 

The main advantage of a balanced system is obvious from a study 
of TVA's method of operation. During the winter, rains are sufficient 
to permit concurrent storage of water in the tributary dams and 
maximum generation of power at the high dams downstream. On the 
other hand, in late summer when rainfall and runoff are low, re- 
leases from the storage reservoirs are used to generate power at these 
dams and provide a flow of water for power generation at the down- 
stream dams. 

Two main types of dams have been constructed in the TVA sys- 

82 Twenty Years of TVA 

tern: one the storage type on tributary streams in the eastern half of 
the Valley, the second the run-of-river type on the main river. All 
the storage dams are similar, being high structures placed as a rule in 
narrow channels with high abutments on each side. They require 
gates to control the flow of water over the dam and adequate spillway 
capacity to pass excess flood water. In addition, they require sluice- 
ways through the dam to discharge water, so as to provide storage 
for a flood which may occur later. And they require a power plant 
to convert the energy of the falling water into electric power. Since 
there is no navigation except near the mouth on the tributary 
streams, the storage dams have no locks. The run-of-river dams on the 
main river are lower and larger, and are built with large gates so as 
to pass a great deal of water during flood flows. Practically the entire 
width of the river at these dams is occupied by the spillway. The 
powerhouse is located at one end of the dam, the lock usually at the 
opposite end. 

Planning and Building the River Control Struc- 

The TVA Act required a report to Congress by March, 
1936, setting out an integrated plan of development for the river. Be- 
fore this plan could be made, several tools of analysis and planning 
had to be refined. One of these was maps. The United States Corps 
of Engineers had made some maps of the main river area, but there 
were few maps in existence of the large areas that contributed to the 
runoff into the river. The federal agency for such mapping is the 
United States Geological Survey, whose policy has been to match the 
sums that a state puts up for mapping in that state. The southern 
states have not been able to put up enough money to provide for any 
mapping of consequence. The first problem then was to find some 
means of mapping the Valley rapidly. A contract was made with the 
Geological Survey whereby in return for an annual payment the TVA 
was able to utilize the Survey's men, machines, and mapping ex- 

The mapping work began with flights over the area to take air- 
plane photographs, from which were made planimetric maps. Such 
maps show the forests, streams, railroads, highways, and all other 
physical features except elevations. While elevations would have been 
useful, it would have been impossible to obtain them in time. The 
planimetric maps, which were completed in a matter of months, were 
then used in planning the integrated system outlined in the TVA's 

The River Control System 83 

1936 report on the "Unified Development of the Tennessee River 

In addition to planimetric maps, topographic maps were needed 
in connection with more detailed planning. For that purpose the 
engineers chose the German multiplex machine, which used the 
stereoscopic principle based on the different wave length of red and 
green light, to portray elevations from small photographs. This topo- 
graphic program was instituted immediately after the planimetric 
maps were finished. TVA refined its topographic mapping to the 
point that the Army Map Service used TVA machines and methods 
for producing many of the maps used in Europe and the Pacific 
Islands during the Second World War. 

Another tool that was lacking was hydrographic data. The Corps of 
Engineers had records sufficient to determine the flow of the main 
river, but to determine flows in the tributaries it was necessary to 
establish many new rainfall and runoff stations. Again recourse was 
had to established agencies, the United States Geological Survey and 
later the state geological surveys, especially those of Tennessee and 
North Carolina, for co-operation in setting up the necessary stations. 

To supplement the long-time records of runoff and rainfall, the 
engineers used a rather unusual tool, that of dendrochronology, or 
the study of tree rings. Some trees in the Valley over 300 years old 
were found, and by cutting them and studying minutely the width of 
the tree rings it was possible to develop cycles of rainfall and to 
predict, based on a 300-year record, what might be expected in the 
future. An extensive system of rainfall gaging stations was established. 
As a rule the gages are read by residents in the area who send in 
reports either by mail or, during times of flood, by telephone or 
telegraph. But many stations were needed where there were no resi- 
dents to read the gages, and there automatic radio gages were estab- 
lished. These gages measure the rainfall automatically and transmit 
radio messages to Knoxville periodically, usually twice a day. Some 
twenty of these gages have operated in such remote spots for years. 

Much geological information likewise had to be obtained. Geo- 
logical conditions in the Valley were generally unfavorable for the 
construction of dams because much of the region is underlain by 
limestone rock, which erodes easily and which produces solution chan- 
nels in many of the places otherwise suitable for dams. This has been 
a continuing problem in connection with the location of dams and 
has necessitated filling and grouting of many channels in the founda- 
tion rock at selected sites. 

The TVA Act was explicit in the matter of navigation on the 

84 Twenty Years of TVA 

main river: the Authority was directed to provide a nine-foot channel 
from the mouth of the Tennessee to Knoxville. But the act left some 
discretion to TVA in its reference to navigation on the Tennessee 
River "and its tributaries." It became clear early in the development 
of the main plan that it would not be practicable to develop ex- 
tensive navigable channels on any of the tributary streams; hence the 
decision was made to construct locks only on the main stream. 

Flood control was of course a different matter, for every dam 
could contribute directly to that goal. The amount of storage to be 
incorporated for flood waters presented a complicated problem. The 
conclusion was reached that about 12,000,000 acre-feet should be 
available for storing floods on the first of January, that this could be 
reduced by March 15 to about 10,500,000 acre-feet, and that it could 
be further reduced by July 15 to 2,500,000 acre-feet. By that time 
each year the danger of any devastating flood was entirely over. These 
figures were used in the integrated plan. 

The plan which was finally adopted included the control of all 
the major tributaries of the Tennessee River. The first of these are 
the Clinch and Powell rivers, which were controlled by the construc- 
tion of Norris Dam; the second is the Holston River, which was con- 
trolled by the construction of Cherokee Dam; the third is the French 
Broad River, which was controlled by Douglas Dam; the fourth, the 
Little Tennessee River, was controlled by Fontana Dam; and the fifth, 
the Hiwassee River, was controlled by Hiwassee Dam. By construction 
of these five main storage dams all of the main tributaries were brought 
under control and much of the 12,000,000 acre-feet of flood storage 
considered necessary was provided. In addition to these main tribu- 
tary dams, dams were later built on some of the minor tributaries, 
including the South Fork Holston River, the Ocoee, the Nottely, and 
the Watauga. On the Little Tennessee River, the Aluminum Company 
of America had built three power dams, none of which was useful 
for flood control. 

TVA started with only one dam, Wilson, at Muscle Shoals. The 
first dam TVA was authorized to construct was Norris Dam, on the 
Clinch River. The TVA Act specified that that dam should be started 
at once. At that time the country was near the depth of the depres- 
sion, and to relieve the unemployment situation it became imperative 
that construction work be begun without delay. But there were no 
designs or plans available. The Corps of Engineers had picked a loca- 
tion which TVA found satisfactory, but not even the height of the 
dani had been determined when TVA took over. Normally, work of 
this character is planned and designed, complete plans and specifica- 

The River Control System 85 

tions are drawn up, bids are called for from contractors, and con- 
tracts are let before construction can begin. That process for a dam 
the size of Norris would take at least a year. It became evident that 
the only possible way to get men to work at once was for TVA to hire 
its own construction forces and start building while plans were still in 
preparation, and this was the policy adopted. TVA hired superinten- 
dents, foremen, laborers, mechanics, and all the other personnel nec- 
essary to build a dam; the men were out on the job working before 
there were any completed plans. The Bureau of Reclamation, called 
on to design the dam, began to turn out plans in Denver for work 
already under way at Norris. Sometimes a telephone call would come 
from the dam site: "Hurry up the plans for the next lift because we 
are about ready to pour concrete." The system worked, but it was of 
course not entirely satisfactory. This work had been going only about 
three months when President Roosevelt ordered a start on Wheeler 
Dam. Again the Bureau of Reclamation was called on for design 
assistance and again construction began with TVA's own forces. In- 
side of two months nearly 5,000 men were at work at Wheeler. 

As work on Norris and Wheeler Dams approached completion, 
construction began on Pickwick and Hiwassee, two other dams called 
for by the integrated plan of 1936. These dams and all subsequent 
dams were designed by TVA's own design organization. To keep the 
system in balance, it was planned to build alternately a storage dam 
and a run-of-river dam: Norris was a storage dam, Wheeler a run-of- 
river dam, Hiwassee a storage, Pickwick a run-of-river, and so on. This 
alternation would result in securing maximum benefits at the earliest 
dates. The first phase of the construction program included the four 
dams mentioned, together with Guntersville and Chickamauga Dams. 
In 1939 TVA completed negotiations with the Tennessee Electric 
Power Company for the purchase of its system, which included Hales 
Bar Dam, Great Falls Dam, Ocoee Dams Nos. 1 and 2, Blue Ridge 
Dam, and several steam plants. 

With the deterioration of the international situation in the early 
1940's, the President and Congress foresaw a need for new power for 
national defense, and TVA was asked to proceed more rapidly with 
construction to expedite power production. The agency was requested 
to devise an emergency program which would produce additional 
power in the shortest time. It responded by speeding up the schedule 
on some of the dams then under construction — Kentucky Dam, Watts 
Bar Dam, and Fort Loudoun Dam — and by beginning another dam 
already planned — Cherokee Dam. The power TVA was asked to 
furnish was not only to supply the Aluminum Company of America's 

86 Twenty Years of TVA 

plant near Knoxville, but also for many other war industries in the 

It was evident that to guarantee firm power for such important 
projects it was necessary to add some steam standby to the system. 
Accordingly a steam plant was proposed for Watts Bar, where TVA 
was then building a dam and had the construction forces, an access 
road, and a construction camp already available. Congress authorized 
first a 60,000-kilowatt unit, then another 60,000, and finally two more, 
or a total of 240,000 kilowatts of electric steam power, all installed in 
Watts Bar Steam Plant. 

As the war situation worsened, the TVA was requested to expedite 
its program still further and to build additional dams, primarily for 
power. This program resulted in construction of four dams which 
were not in the integrated plan. These were the Chatuge, Nottely, 
Ocoee No. 3, and Appalachia Dams. They were completed in record 
time and were able to furnish power for the war effort. They con- 
stituted the second emergency program. 

Although TVA was then building dams at a very rapid rate, Con- 
gress authorized still more power, not only for the production of 
aluminum but also for the new federal project at Oak Ridge. The 
purpose of this project was still secret, but it demanded a large 
amount of power, necessitating a third emergency program. This in- 
cluded a dam at Fontana on the Little Tennessee, and Douglas Dam 
on the French Broad River. In order to start Fontana Dam, a contract 
was made with the Aluminum Company of America which called for 
the company to furnish the site for the dam and for TVA to build a 
dam on this site and to furnish the company a certain amount of 
power at its Alcoa plant at agreed prices. Under this contract, TVA 
started to build Fontana Dam, but Douglas Dam was held up because 
Congress at first was put under pressure to deny funds for this dam 
in favor of two dams on the Holston. 

Douglas was needed, however, for several reasons. Most important, 
the power that it would produce was more than could possibly be 
found elsewhere. In addition, it was an essential link in the integrated 
system in that it controlled one of the largest tributaries, the French 
Broad. Congress postponed action for about thirty days, and in the 
meantime authorized two other dams, South Holston and Watauga, 
as a substitute. These two dams were in no way a substitute for Douglas 
Dam, and in the end Congress recognized the value of Douglas for 
power and authorized its construction. It was completed within thir- 
teen months, making a world's record in construction time for a project 
of this size. 

The River Control System 87 

Before the end of the war the three emergency programs were 
largely completed and the plants were supplying power for the war 
effort. TVA's electricity load had grown from nothing in 1933, very 
gradually for the first few years and then at an increasing rate, until 
in 1945 it had reached a peak of about 2,000,000 kilowatts. Every- 
body expected that at the close of the war it would immediately drop, 
and so it did. But, inside of one year it had climbed back to where 
it was at the peak of the war, and it continued to go up at an ac- 
celerated rate. 

As a result, TVA had to resume work on two dams on which con- 
struction had been postponed during the war, the South Holston and 
Watauga Dams. Still more power was needed; so two additional dams, 
Boone and Fort Patrick Henry Dams, were started. In addition, it 
became essential to have more steam power in the system. The Watts 
Bar Steam Plant of 240,000 kilowatts provided a very small percentage 
of the total 3,000,000-kilowatt capacity, which was not sufficient steam 
standby power to carry through a dry period. TVA asked Congress to 
authorize construction of another steam plant, and since the Watts Bar 
Steam Plant was on the east end of the Valley, it was logical to have 
the other steam plant at the west end. This project, though not ap- 
proved by Congress on its first submission, was approved in 1949, and 
became the Johnsonville Steam Plant. 

The importance of steam plants in a hydro system of this char- 
acter is not always understood. A hydroelectric system, of course, is 
dependent upon rainfall, which is erratic. Power from the dams must 
be sold to consumers who naturally insist on getting electricity when 
needed. No manufacturer could afford to build a plant and then 
have power cut off for certain months of the year when he might need 
it most; so the only kind of power having a high market value is 
power which is available all the time. This is called firm or con- 
tinuous power. It is impossible for a hydroelectric system to guarantee 
a maximum output of power for every year or even for any part of 
the year, because there will always be years of low flow in any ten- 
or twenty-year period. Moreover, in some years a very dry month will 
occur, usually in the fall, when there will be a deficiency of water to 
carry the system loads. The storage dams, of course, help minimize 
that difficulty, but by themselves they are not sufficient. This makes it 
necessary to have some auxiliary standby, which in the TVA system 
is provided by steam plants using coal. 

However the TVA power demand has now far exceeded the 
hydroelectric capacity of the Tennessee River system. One of the 
greatest factors in that growth is the demand of the Atomic Energy 

88 Twenty Years of TVA 

Commission's plants at Paducah and at Oak Ridge. To meet these 
heavy loads, TVA was forced to build more steam plants. At the 
present time TVA is building seven steam plants, the total capacity 
of which is in the neighborhood of 5,000,000 kilowatts. 

A feature of TVA's construction program is that it has main- 
tained its own labor force from the beginning. Note was made of the 
need for speed in starting work on Norris and Wheeler Dams, a need 
which made impossible the detailed plan and design work and the 
deliberate approach that a normal construction contract would have 
required. The results obtained were so satisfactory on these jobs that 
the organization built up there was used as a nucleus on Pickwick 
Dam and on all major construction projects subsequently undertaken. 

The force account method of construction was found satisfactory 
for many reasons. First, it eliminated the necessity of having complete 
plans and specifications ahead of time, so that men could be started 
to work at once and plans furnished as work progressed. As a matter 
of fact, specifications in such detail as a contractor requires were 
found unnecessary and so were eliminated. Second, the engineer has 
much better control of the job under the force account system; the 
flexibility inherent in the system permits ready accommodation to 
changed conditions. Third, the workmen are more likely to consider 
themselves, and to be considered, as responsible members of the or- 
ganization than under the contract system. From the beginning, to 
illustrate, TVA was concerned about adequate housing for its work- 
men, and indeed built an entire town near Norris Dam in order that 
its work force might be properly housed. Fourth, and as one direct 
result of management's interest in labor, the force account system 
virtually eliminated strikes and labor disputes, so that in twenty years 
TVA's construction has been remarkably free of shutdowns caused by 
labor disputes. Fifth, the force account system as employed by TVA en- 
sures continuous employment for a large construction organization, 
and continuous use of expensive equipment as well. TVA has con- 
struction men who began with Norris Dam and who have moved 
from project to project almost continuously since. The savings ef- 
fected through consistent employment of an experienced and well- 
knit organization are incalculable. Sixth, the work under force ac- 
count is done at cost, and the contractor's profit is eliminated. These 
advantages of the force account system have been demonstrated time 
and time again during TVA's twenty years of experience on big con- 
struction projects. In point of physical achievement, TVA's construc- 
tion organization has set many records as it has brought one project 
after another to completion on schedule. In fiscal terms, while in- 

The River Control System 


dividual projects occasionally have run over estimates in cost, the 
grand total cost of 21 major projects has run only 2 per cent over 
grand total estimates — a spectacular achievement both in estimates 
and in execution, considering that the figures involved total more than 
$700,000,000. In comparison with the contract system, the force ac- 
count has proved to be more economical and efficient in TVA's ex- 
perience. The facts which justify this judgment are too numerous to 
list here, but the record is clear and the data are available for any 
who may wish to examine them. 

The Tennessee Valley Authority has traveled far since the early, 
urgent days of hasty construction by relief workers. Its construction 

Table i 

Major Projects Constructed by the Tennessee Valley Authority 


Estimated Cost 

Actual Final Cost 









of Units 

Amount of Units 



10- 1-33 


$ 36,025,230 


$ 30,508,024 



1 1-2 i-33 

11- 9-36 






3" 8-35 













12- 4-35 

8- 1-39 





1 -1 3-36 

3- 4-40 





7- 1-38 




1 16,302,296 


Watts Bar 

7- i-39 

2-1 1-42 





Fort Loudoun 

7- 8-40 

11- 9-43 






8- 1-40 







2- 2-42 







1- 1-42 







7-1 7-41 
7-1 7-41 




Ocoee No. 3 

7-1 7-41 







7-1 7-41 











3 I ,54i,053 


South Holston 

8- 4-47 

2- 1 3-5 1 






7- 1-50 






Ft. Patrick Henry 

5- i-V 

12- 5-53 





Additional Units 








Watts Bar 

8- 8-40 


$ 18,200,000 


$ 18,866,876 









Widows Creek 


7- 1-52 













9-1 2-5 1 


1 10,500,000 





1- 6-51 

4" 9-53 






8- 5-52 





John Sevier 











Grand Total 


* Not completed at the time of writing. 

go Twenty Years of TVA 

program in the years since 1933 is summarized in the accompanying 
table, which lists twenty dams and eight steam plants as having been 
built or as under construction by the agency. The river control system 
includes not only these twenty dams, but fourteen others as well, of 
which one (Wilson) was built by the United States government in 
pre-TVA days, three were constructed by the Corps of Engineers, and 
ten either were acquired from or are operated under contract with 
private business. Of the total of 34 major dams, nine are on the main 
stem of the Tennessee, 21 are on tributary streams, and four are in 
the Cumberland Basin. All are integrated into the TVA's river con- 
trol system, shown in the map and profile illustrations found on the 
inside covers of this book. 

TVA's Engineering Organization 

The planning, design, and construction of TVA's mul- 
tiple-purpose system is carried out by the Office of Engineering, headed 
by the Chief Engineer. This office is organized into three major divi- 
sions, the Division of Water Control Planning, the Division of Design, 
and the Division of Construction, which are headed by a Chief Plan- 
ning Engineer, Chief Design Engineer, and Chief Construction En- 
gineer, respectively. The Division of Water Control Planning in turn 
is divided into seven branches, as follows: the Maps and Surveys 
Branch, which has the responsibility for making all maps and surveys; 
the Hydraulic Data Branch, which has the responsibility for obtaining 
all rainfall, runoff, and other hydraulic data necessary in planning; 
the Geologic Branch, consisting of a few geologists who have the re- 
sponsibility for determining geologic conditions influencing design and 
construction; the Power Studies Branch, which studies the power 
potentialities of the river; the Flood Control Branch, which studies 
past floods and potential floods and plans for the regulation of these 
floods; the Project Planning Branch, which, using data provided by 
the other branches, develops plans for project construction; and the 
River Control Branch, which has the responsibility for the operation 
of the system after the dams are constructed. There are about 600 
employees in this division. 

After a plan for a particular project has been completed by the 
Project Planning Branch, it is incorporated in a planning report 
which, after approval by the Chief Engineer, is transmitted to the 
Division of Design for execution of designs and specifications. This 
division comprises five design branches, dealing respectively with Civil 
Design, Electrical Design, Structural and Heavy Equipment Design, 

The River Control System 91 

Mechanical Design, and Architectural Design. In addition, there is an 
Inspection and Testing Branch to inspect the equipment purchased 
from manufacturers, a Drafting Service Branch for the actual drafting 
of drawings as distinguished from the design, and a small technical 
staff of specialists in various lines for advice on special problems. This 
division has over 600 engineers, although the number varies as the 
nature of the work changes. 

The Division of Construction is organized in a number of branches, 
including a branch for each project under construction. At present 
there are eight such branches. In addition, there are two service 
branches, the Construction Plant Branch, which designs the construc- 
tion plants for all the different projects; and the Construction and 
Maintenance Branch, which does the lighter construction work. The 
number of personnel in this division varies with the amount of work 
under way, and at present totals somewhat less than 10,000. The ma- 
jority of these are skilled craftsmen and laborers. 

A small staff is responsible for the administrative work of the 
Office of Engineering; and a Board of Consultants, consisting of a 
group of eminent engineers from all over the United States, meets 
from time to time to advise on special problems. 

River Control Operations 

The principal water control responsibilities assigned 
to the TVA by the Act of 1933 were (a) to provide nine-foot navigation 
on the Tennessee River from its mouth to Knoxville; (b) to control 
destructive flood waters in the Tennessee and Mississippi River ba- 
sins; and (c) to generate the maximum amount of electric power 
consistent with the first two objectives. Because of the temperamental 
character, and the sometimes catastrophic consequences of rainfall, 
the prevention of floods has been given primary attention in TVA's 
system of river control. As noted earlier, the water held back from 
destructive flooding can be used for both navigation and power pro- 
duction, but the first and basic consideration is protection from 

Floods and scenes of devastation have been frequent along the 
Tennessee River and its tributaries. Often the Valley-wide floods 
have had a destructive effect on the lower Ohio River and the lower 
Mississippi. Adding their waters to an already overburdened Mis- 
sissippi, the peak of one flood was piled on top of another. 

While floods long have ravaged the whole Tennessee Basin, Chat- 
tanooga has suffered most. It is said that a steamboat pushed down 

g2 Twenty Years of TVA 

the main business street of the city during the crest of the 1867 flood. 
Other great floods, though not quite so high, occurred in March, 1875, 
April, 1886, and March, 1917. Several scores of small floods, averaging 
about one a year, equaling or exceeding a flood stage of thirty feet 
and causing varying amounts of damage, have plagued the city. 

The average rainfall in the Tennessee River Basin in a year is 
about 51 inches. Some 20 inches, or approximately 40 per cent, 
usually falls during the flood season in the winter and early spring. 
Of this 20 inches, something like ten inches run off. During a 
whole year the total runoff is only 22 or 23 inches, so that nearly 
half the yearly total occurs in the January-to-April flood period. Wet 
ground and other conditions in the winter may cause runoff during a 
heavy storm to be 75 per cent or more of the rainfall. It is under such 
circumstances that floods occur. 

In discharging its water control responsibilities, the TVA brings 
into play as an integrated system the thirty major dams on the Ten- 
nessee River and its tributaries. The annual cyclical pattern of rain- 
fall and runoff, established by exhaustive analysis over the history of a 
century, governs the operation of the system. Operating guides called 
"rule curves," one for each storage reservoir in the system, show in 
graphic form the limits of fill and drawdown which can be allowed 
for a particular reservoir throughout the year. These guides and their 
use in the whole system of multiple-purpose reservoirs is probably the 
most distinctive characteristic of TVA water control operations. 

The guides for the tributary reservoirs provide for the water to be 
at its lowest level on January 1, when the flood season is just be- 
ginning and when the greatest amount of flood storage space is 
needed. The level rises gradually during the flood seasons, until the 
end of March; thereafter it rises steeply so that the reservoirs may 
reach their highest level not later than June 1. When heavy flood 
runoff occurs, the reservoirs are temporarily filled above the guide 
curve until the flood crest has passed downstream. They are then 
drawn down again to the required seasonal level as the flood recedes. 
During the summer, when runoff is moderate or low, they are filled 
as nearly as possible to top level. Then starting in late summer or 
early fall, the water is drawn out gradually so as to return again to 
the flood control level by January 1 to be ready for the next flood 
season, thus completing the annual cycle. The tributary reservoirs 
may be substantially below top levels during periods of drought and 
may not be completely refilled. 

The mainstream reservoirs are also at their lowest level on Janu- 
ary 1, but unlike the tributary reservoirs they remain at that level 

The River Control System 93 

until the end of the flood season (about April 1) before filling to 
top summer level. Like the tributary reservoirs, those on the main 
stream may be filled temporarily to the top of the gates, the highest 
operating level, one or more times in the flood season in storing water 
to reduce the flood crest downstream. After the flood season the water 
is at its highest normal level until late summer or early fall. Then 
it is gradually drawn down during the fall dry season to return by 
January 1 to its minimum flood control level and thus complete the 
cycle. In the summer and early fall operation the water level is fluc- 
tuated about one foot weekly which, together with a gradually re- 
ceding water level, strands and destroys mosquito larvae and effec- 
tively aids in malaria control. 

Dependable and frequent predictions of the amount of rain ex- 
pected and adequate reports of rainfall and stream stages are essential 
to successful water control. To meet the first of these needs, the U. S. 
Weather Bureau, through a co-operative agreement, furnishes TVA 
at least two forecasts daily of precipitation to be expected. During 
floods three daily forecasts are furnished. The staff of TVA engaged 
in water control operations includes personnel who (1) collect and 
transmit rainfall and stream flow data; (2) receive, assemble, and 
analyze these data; and (3) apply the data to the current conditions 
to determine where it is necessary to impound or release water to 
maintain desired river levels and flows. 

In the years since March, 1936, when TVA began reservoir opera- 
tions with the closure of Norris Dam, the benefits of flood regulation 
in the Tennessee Valley have been .very great. These benefits have 
been felt on the five principal tributary streams below the multiple- 
purpose reservoirs and all down the main Tennessee Valley through 
the reduction of flood crest heights. From 1936 to 1951, fifteen floods 
occurred at Chattanooga which in their natural state would have 
equaled or exceeded a flood stage of 30 feet, at which damage begins. 
All of these floods were lowered by amounts varying up to as much as 
12.5 feet, the greater reductions being mostly from the higher flood 
crests. The total estimated savings in flood damages averted at that city 
alone exceed $45,000,000, more than one-fourth of the flood control in- 
vestment in the entire river system. The real effectiveness of the TVA 
system was shown in three successive years, 1946, 1947, and 1948, when 
without regulation the fifth, sixth, and seventh highest floods of record 
would have occurred. All three would have been very close in height 
to the fourth highest of record in 1917. These three flood crests were 
lowered by from ten to 12.5 feet with estimated savings aggregating 
some $36,000,000. 

94 Twenty Years of TVA 

In the same fifteen-year period some 24 floods on the Mississippi 
River which would have equaled or exceeded a flood stage of forty 
feet at Cairo, Illinois, were lowered by amounts varying up to two 
feet, the larger reductions again being usually from the highest flood 
crests. Some of the smaller reductions were before the big Kentucky 
reservoir came into use in 1944. It has been estimated that the TVA 
water control system can reduce dangerous floods on the lower Ohio 
and Mississippi rivers by as much as two to four feet, depending on 
the type and size of flood in the Tennessee River Basin. 

The success of TVA's system of water control is of course to be 
measured in terms of results obtained. As to the primary objective, 
the control of excess runoff, it may be noted simply that there has 
been no serious general flood since the system went into operation. 
The latest available report gives the estimated average annual net 
value of flood regulation by the TVA reservoir system after deducting 
annual costs as about $8,500,000, an amount equal to five per cent of 
the flood control investment of $170,000,000. Navigation is a story 
to be separately told, but it may be noted here nevertheless that the 
nine-foot channel stipulated in the Act of 1933 nas Deen established, 
with lakes and locks throughout the 630 miles from Knoxville to the 
Ohio River. The power story likewise requires separate treatment, 
though again it is worthy of brief note that the TVA power system 
was not found wanting in the emergencies of the war and the im- 
mediate postwar years. Over all, the concept of the multiple-purpose 
development of the river has been vindicated by a successful operat- 
ing experience of over twenty years. 

Chapter 7 

River Transportation 

By E. P. Ericson 

Water transportation is one of the oldest methods 
for the movement of things known to man; yet when the term is 
mentioned in reference to river navigation in the United States, it 
conjures up a wholly unrealistic picture in the imagination of the 
listener. The vision which comes frequently to mind is that of an old 
stern-wheel packet steamer, its deck piled high with bales of cotton 
and its human cargo divided equally between Negro crew hands armed 
with banjos and Gentlemen Gamblers armed with playing cards. It is 
not material that, except for an occasional carefully staged spectacle, 
this form of traffic disappeared from America's rivers upward of half a 
century ago. "Steamboat 'round the bend" is a native legend which 
dies hard. 

What is material is that river transportation has taken on both 
new life and new form in the last three decades. The "Robert E. Lee" 
has given way to an unromantic but highly efficient all-welded steel 
boat, its screw propellers driven by two or three Diesel engines 
totaling perhaps 5,000 horsepower, pushing a fleet of steel barges 
carrying 20,000 tons of cargo or more — the equivalent of 400 rail car- 
loads. The modern river queen is modern indeed, from radar for 
navigation through fogs to television for entertainment of the crew. 
It knows little of the excitement that historians record for its fore- 
runner: it has seldom been stuck on a sand bank; it is kept in the 
channel by frequent buoys and lights; and it ties up at well-kept 
and well-attended terminals. But it plays an increasingly important 
part in America's industrial life, for river transportation in our day 
is big business. 

TVA's statutory obligation to provide river transportation led to 
the construction of seven high dams on the main stem of the Tennes- 
see which, together with the two already there, converted the river 
into nine slack-water reservoirs. These reservoirs, sometimes called "the 


96 Twenty Years of TVA 

Great Lakes of the South," are connected by locks which permit 
through navigation over the 630 miles of the river up to Knoxville. 
The dams have created navigable channels for varying distances and 
depths in several of the tributary streams and in many embayments. 
A network of subsidiary waterways of almost 300 miles has been thus 
added, 110 miles of it with a depth of nine feet or more. TVA's nine- 
foot main-stem channel is somewhat less than ten per cent of the 
nation's nine-foot inland waterway system in length (630 miles as 
against 6,970), but its total main-stream and tributary channel of 
more than 900 miles constitutes an extremely important link in the 
transportation network of the Tennessee Valley. 

TVA's Function in River Transportation 

TVA's interest in river transportation extends beyond 
the construction and operation of the dam and reservoir system which 
created the canalized waterway. Improved navigation on the Tennes- 
see River is one of the major programs through which TVA fulfills 
its broad responsibilities for unified development of the region's re- 
sources and the industry and agriculture of the Tennessee Valley. 
Accordingly, having built a navigable channel, TVA is deeply con- 
cerned that the waterway be employed and that it make its maxi- 
mum contribution to the economy of the region. 

Before the new, low-cost transportation route could be effectively 
used, other important features of the project had to be developed. 
Terminals, linking water and land transportation facilities, had to be 
built; barge line services had to be established; shippers had to be 
acquainted with the fact that the new waterway existed and with the 
opportunities it offered for cheaper transportation; and co-ordina- 
tion of joint routes and rates between water and land carriers had to 
be effected. 

A basic premise in TVA's unified approach to the development 
of natural resources has been that as much of the total job as pos- 
sible must be done by the people of the region. TVA has, through 
the years, encouraged the assumption of responsibility by private 
enterprise and by state and local governmental agencies for fostering 
the development of all phases of the river transportation program 
other than the construction of the navigation channel. One of the 
earliest efforts toward this co-operative approach is seen in connection 
with the river freight terminals established for public use on the 
Tennessee River. 

River Transportation 97 

The terminals on the Tennessee in active use in 1933 were mostly 
sand and gravel docks and unimproved landings for loading of forest 
products. Early in TVA's history, it was recognized that the waterway 
could not be fully used and that the small shipper who could not 
afford a private terminal would be left without access to the waterway 
unless public-use general commodity terminals were built. A sustained 
program of encouragement of local agencies and institutions was car- 
ried on from about 1939 to 1942 in an effort to obtain some type of 
non-federal sponsorship for public-use terminals. This effort probably 
would have been successful but for the Second World War. In order to 
provide promptly for the transportation needs of the region and the 
nation during that emergency, TV A, with Congressional approval, 
constructed public-use terminals at Knoxville and Chattanooga, Ten- 
nessee, and Guntersville and Decatur, Alabama. 

TVA operated these terminals during the war emergency and 
through 1951. During this period it was demonstrated that sufficient 
traffic could be obtained to make the terminals attractive to private 
operators. Also, it was obvious that private operators could actively 
solicit river traffic, whereas TVA as a government agency could not. 
For the same reason it was not felt that either the state or local gov- 
ernments should be encouraged to operate the terminals. At the be- 
ginning of 1952, therefore, TVA leased the terminals, with an option 
to purchase, to private operators. During the first year under private 
operation, the terminals handled more traffic than during any prior 
year, and the prospects for substantial future traffic growth are bright. 

In the twenty years since 1933, a total of about 45 terminals have 
been built along the Tennessee River. All except the public-use ter- 
minals have been constructed and operated by private enterprise. The 
development of private terminals has been facilitated by TVA's as- 
sistance to industries and others in locating sites where channel ac- 
cess could be obtained at minimum cost, and in providing data on 
reservoir pool levels and operating conditions and advice on special 
freight-handling problems. 

Over thirty barge lines operate on the Tennessee River, most of 
them on a for-hire basis, and all of them are owned and operated by 
private companies. Six barge lines are common carriers which offer 
to transport nearly any kind of freight for the general public at pub- 
lished rates. Fifteen are contract carriers transporting commodities 
under specific contract with their customers; the remainder are pri- 
vate concerns hauling their own freight. Nearly all of the common 
and contract carriers operate over large parts of the Mississippi River 

g 8 Twenty Years of TV A 

system in addition to the Tennessee. No less-than-bargeload service is 
being offered to shippers at the present time, and no joint rates with 
rail or truck lines are available (except on automobiles shipped by 
barge-truck through Guntersville, Alabama). 

TVA has assisted many of these water carriers on request by ad- 
vising on navigation conditions, terminal services, and traffic oppor- 
tunities. Also, the Authority intervened before the Interstate Com- 
merce Commission in behalf of two of the common carriers when 
they sought operating rights on the Tennessee River. 

In order that the public might benefit by its investment in the 
navigation project, it has been necessary also to make some effort to 
acquaint shippers with the existence of the new waterway and the 
advantages of using it. This has been a more formidable task in the 
Tennessee Valley than it would have been in some other regions, 
such as along the Ohio River or the lower Mississippi where a sub- 
stantial degree of commercial navigation had long been possible even 
before extensive federal improvement. 

In 1939 and 1940 TVA made a survey of prospective traffic for 
the Tennessee River. This survey was made for the purpose of ap- 
praising the need and determining the best locations for the public- 
use terminals, but in addition it put TVA for the first time in direct 
contact with the shipping interests in the region. Approximately 3,700 
shippers in 191 cities and towns were visited. The results of the survey 
were published and given wide circulation. Later, other reports were 
prepared relating to opportunities for cheaper transportation via the 
Tennessee, and to the advantages of shipping specific commodities 
such as coal, grain, iron and steel products, canned goods, and the 
like. These reports were distributed to producers, shippers, barge 
lines, and other interested groups and agencies. 

No business changes its shipping practices or makes an investment 
in river terminal facilities solely on the strength of the general as- 
surances found in a report or illustrated brochure. The businessman 
requires exact knowledge of the dollar-and-cent advantage to him per 
unit of his product. And in the case of prospective Tennessee River 
shippers, information was also needed on such subjects as what barge 
lines could handle the traffic; what size shipments would be accepted 
for barge transportation; where a terminal could be built and how it 
should be built. TVA prepared itself to help prospective shippers get 
the answers to the questions. A small staff of transportation experts 
was assembled — experienced traffic and freight rate men, transporta- 
tion economists, and engineers familiar with the physical problems of 
water transportation. The transportation group has worked on re- 

River Transportation 99 

quest not only with existing businesses but with industries consider- 
ing a Tennessee Valley location. It has in some way and in some de- 
gree assisted in nearly every major traffic movement now on the 

Growth of Commerce on the River 

During the early days of TVA, navigation was referred 
to by some as one of the two constitutional pegs on which the whole 
TVA program was hung. The implication frequently was that naviga- 
tion did not amount to very much and probably would never be 
more than a mere peg. When Pickwick Dam was under construction 
someone observed that it would be cheaper for TVA, instead of 
building a navigation lock in the dam, just to buy every boat that 
came up the river and wanted to get through. It is fortunate that the 
lock was built, for today about 1,500 bargeloads of commodities come 
up the Tennessee and pass through Pickwick lock each year. As just 
one example of what that means to commerce, two tows of automo- 
biles pass through Pickwick lock each week on the average. These tows 
carry from 500 to 1,000 automobiles each, and the value of the cargo 
ranges up to more than $2,000,000 per tow. 

Three principal factors underlie the significant growth in Tennes- 
see River traffic of the last twenty years. First may be mentioned the 
technical revolution in the means and methods of water transporta- 
tion. Diesel-powered steel boats now provide the motive force for 
river transportation, and they propel fleets of barges carrying tremen- 
dous loads at an average speed of five or six miles per hour, in slack 
water sometimes twelve miles an hour. The present trend in barge 
construction is toward larger barge units and integrated tows. The 
barges are of all-welded steel construction and are of three common 
sizes, 26 feet wide by 175 feet long (Ohio River standard), 35 feet 
by 195 feet (the jumbo barge) , and 50 feet by 300 feet (the approxi- 
mate size of many petroleum tank barges) . The first size will handle 
up to 1,000 tons, the second about 1,500 tons, and the third from 
2,500 to 3,000 tons. There is no comparison in efficiency and econ- 
omy between this equipment and that of even ten years ago. 

Second, the facilities on the river have been greatly improved 
and expanded since 1933. Note has been made of the channel, both 
main-stem and tributary, which TVA's high dams have established. 
Physical facilities apart from the channel likewise have been brought 
abreast of modern requirements. Navigation locks are being built to 
greater dimensions to accommodate larger tows with a minimum of 

ioo Twenty Years of TVA 

lost time in lockage. The newest lock to be opened for navigation on 
the inland system is the Chain of Rocks lock on the upper Mississippi 
River near St. Louis. This lock is no feet wide and 1,200 feet long, 
almost as large as four football fields placed end to end. It is larger 
than any of the Panama Canal locks. On the Tennessee River the 
two dams farthest downstream have locks no feet by 600 feet, and the 
locks at the other dams are 60 feet wide and vary in length from 265 
to 360 feet. Already the 60 by 360 locks are proving to be small. For- 
tunately the Tennessee River dams have been designed so that ulti- 
mately each dam can be equipped with two locks, one large and one 
small. River terminals, which are so vital to water transportation, 
are built today to handle large quantities of freight quickly and with 
maximum economy, and have little resemblance to the picturesque 
landings of steamboat days. Specially designed terminals load or un- 
load such bulk commodities as petroleum products, coal, and grain 
for only a few cents per ton. 

Third, the rapid industrial growth of the region has resulted in 
multiplying many times over the demand for transportation services 
of all types, and has been particularly marked in those industries for 
which a site on a navigable waterway is an important location factor. 
The cities along the river — Chattanooga, Sheffield, Decatur, Gunters- 
ville, and Knoxville — give bustling testimony to the growth in in- 
dustries of this sort. Aluminum mills, chemical plants, grain mills 
and elevators, factories for the manufacture of air-conditioning equip- 
ment, plastics plants, ship yards, brick and tile works, and many other 
new enterprises now line the new waterfronts of these cities. One of 
the most spectacular developments has occurred at Calvert City, Ken- 
tucky, where four major companies have made plant investments 
totaling more than $30,000,000 in and around a crossroads town 
which, with no more than a scant 400 people five years ago, now 
faces boom conditions. 

Another truly inspiring story of a river-connected industrial de- 
velopment concerns the great new newsprint mill built by the Bo- 
waters Southern Paper Corporation at Calhoun, Tennessee. The 
plant when completed will cost in the neighborhood of $55,000,000, 
and will turn out 130,000 tons of newsprint and 50,000 tons of kraft 
pulp a year. Employing some 750 men, it will have an annual payroll 
of $3,500,000. Its long-range effects upon a hitherto neglected segment 
of the Valley's economy are incalculable, but there is not the least 
reason to doubt that they will be great. Bowaters chose the Calhoun 
site from among more than thirty inspected, in part because of the 

River Transportation 101 

ready availability of water transportation. The new plant lies eighteen 
miles up the Hiwassee River from its junction with the Tennessee; 
and Chickamauga Dam, down the Tennessee from the Hiwassee, 
gives the latter a nine-foot channel to the door of the mill. About 
one-third of the pulpwood required to feed the mill will come to 
Calhoun in company-owned barges. Water transportation will prove 
important later in delivering the plant's finished product to its cus- 
tomers, some of whom are as far away as the Gulf Coast of Texas. 
Another factor which weighed in favor of the Calhoun site was the 
availability of ample quantities of industrial water, which by reason 
of Chickamauga Dam on the Tennessee below the plant and several 
storage dams on the Hiwassee River above could be taken from the 
Hiwassee without detriment to the river or to any established user. 
An alternative location outside the Tennessee Valley was eliminated 
because of extreme variations in height in the river on which the 
site lay; at Calhoun the Hiwassee maintained a relatively fixed level 
with only minor variation, thanks to TVA's integrated control of the 
waters in the whole Tennessee River system. There were, of course, 
other factors which weighed in Bowaters' selection of the East Ten- 
nessee site for its new plant, but the water conditions which it found 
there, and more particularly the presence of a navigable channel 
at millsite, were basic in the final decision. 

The technical revolution in water transportation, the improve- 
ment of the river and its facilities, and the extraordinary industrial 
growth of the Valley have combined to produce significant traffic 
changes. First, volume has expanded tremendously: the 1952 ton- 
nage for the river amounted to almost 5,850,000 tons, which is eight 
times the 1932 volume and 56 per cent more than that of 1951. Second, 
there has been a great increase in the variety of commodities moving 
on the river. In addition to sand and gravel and forest products, 
which had been transported for many years, new traffic has developed 
in higher value commodities such as petroleum products, automobiles, 
grain, fertilizer, coal, coke, iron and steel articles, scrap metals, salt, 
sulphur, manganese ore, and chemical products. Third, traffic today 
is moving far greater distances over the river. In 1932 the average 
length of haul was 22 miles, in 1952 it was 140 miles. Excluding sand 
and gravel, the average length of haul in 1952 was 205 miles. By 
multiplying tons of traffic by length of haul, the figure of 834,000,000 
ton-miles is obtained for 1952, which is over 50 times the ton-mileage 
in 1932. Nobody who is familiar with the facts believes that the end 
of river traffic development is in sight, but certainly the growth from 

102 Twenty Years of TVA 

1933 to 1953, and more particularly for the second half of that 
period, has been substantial. 

An Appraisal of Tennessee River Navigation 

Critics of the TVA have attacked its emphasis on river 
navigation on several grounds, chief among them that the multiple- 
purpose development of the river could not be made to work, and that 
in any case the development of navigation facilities would never be 
economically worth while. As to the former, successful operation of 
TVA's system of water control over a period of twenty years would 
seem to constitute sufficient answer. Concerning multipurpose use in 
specific reference to navigation, it may be noted that a single-purpose 
navigation system on the Tennessee River would have involved con- 
struction of 32 low dams at an estimated cost of 1225,000,000 whereas 
through integrated development the needs of navigation were served 
by construction of nine high dams at an allocated cost of $155,000,- 
000. The multiple-purpose development of the river thus saved $70,- 
000,000 in navigation construction costs alone. It was beneficial to 
water transportation in a number of other directions as well. The 
storage dams on the tributaries make it possible to reduce extremes 
in flow, thus decreasing the threat of flood on the one hand and en- 
suring a minimum flow on the other. The high dams on the main 
stream offer opportunities to improve channel alignment and to ex- 
tend navigable depths farther up the tributary streams. They also 
minimize the velocity of stream flow. In short, the multiple-purpose 
concept has worked to the strong advantage of navigation, which 
has profited enormously from TVA's system of water control. 

The challenge of the navigation system's economic worth is de- 
serving of brief analysis. As we have previously noted, TVA made a 
comprehensive survey of the traffic potentialities of the Tennessee 
River in 1940, and on the basis of it predicted that about 2,600,000 
tons of freight would move on the river in the first full year after 
completion (in 1945) of the nine-foot channel, and that transporta- 
tion savings on this traffic would amount to about $3,452,000. This 
estimate was then projected into the future over a fifteen-year devel- 
opmental period, and the average matured traffic was estimated at 
about 7,000,000 tons and the annual savings at $9,000,000. It was this 
estimate which was considered as justifying the $155,000,000 capital 
investment which TVA has made in the navigation program. 

Those unfriendly to TVA contended from the outset that traffic 

River Transportation 103 

and shipper savings would never increase at the rate forecast by TVA; 
hence, they argued, the capital investment in navigation could not be 
justified. One of the first of these criticisms was made in a staff report 
of the Board of Investigation and Research, a federal research group 
set up by the Congress under the Transportation Act of 1940 to investi- 
gate certain phases of the national transportation problem. This re- 
port made an exhaustive analysis of TVA's estimate of potential ton- 
nages and savings on the Tennessee River, and of the TVA allocation 
to navigation. It disputed TVA estimates and concluded that the pro- 
jection for the first full year of operation (2,600,000 tons) should be 
considered as a liberal estimate of matured rather than immediate 
traffic, and that the estimated first-year savings (13,452,000) should be 
regarded as the matured savings. 

Subsequent developments have disproved these contentions. Al- 
though the completed channel has been in operation only seven years, 
traffic is almost 6,000,000 tons a year. In other words, the 1952 tonnage 
was more than double that which the board's experts regarded as 
matured traffic. The annual savings, estimated for 1952 at $10,000,000, 
are about three times what the Board regarded as the matured level 
of savings. 

The annual cost of operating the Tennessee River navigation 
system, including depreciation and all maintenance and operating ex- 
penses of TVA, the Corps of Engineers, and the Coast Guard, totals 
about $3,500,000. Thus, the annual saving to shippers of about 
$10,000,000 produces a net saving of approximately $6,500,000. This is 
a four per cent return on the government's navigation investment. 
Many economic indicators point to a substantial growth in traffic and 
savings in future years. Economic maturity has by no means been 
reached. It seems safe to say that the public investment in the Tennes- 
see River waterway is and will continue to be amply justified, both 
financially and through its contribution to interregional commerce 
which strengthens the nation as a whole. 

In over-all evaluation, it should be noted that inland water trans- 
portation is but one aspect of the country's internal transportation 
network, which includes in addition rail, highway, air, and pipeline. 
There is a most efficient way to ship each commodity, and conversely 
a most efficient function for each mode of transportation. In compari- 
son with the other principal forms of transportation, shipment by 
water has certain important advantages, along with some palpable 
disadvantages. The most important inherent advantage of water 
transportation is its low cost, which in many cases is less than that of 

104 Twenty Years of TVA 

any other mode. Water transportation has inherent disadvantages as 
well. It is relatively slow (often not a serious disadvantage). For most 
economical shipping it requires the assembly of large quantities of 
goods, which creates attendant problems of warehousing, financing, 
and delay. A further disadvantage is that it can serve directly only the 
port cities located on the waterways. Shippers beyond ports can be 
reached only by connecting rail, pipe, or truck lines, a fact which em- 
phasizes the dependence of water transportation upon adequate co- 
ordination with land carriers. In many cases, however, the great in- 
herent advantage of low cost of barge shipment is enough to over- 
ride these disadvantages and show a clear margin justifying the use 
of water transportation. 

There is one thing which, in relation to the total transportation 
system, transport by water does not do: it does not, as is sometimes 
charged, undermine or compete unfairly with other modes of transpor- 
tation. The testimony of a director of a major southwestern railroad, 
offered at a hearing in Washington in 1946, is instructive on this 

I am a director of one of the Nation's large rail systems, but / am in 
complete disagreement with any who may oppose water freight transporta- 
tion in the belief that it would compete unduly or unfairly with other 
forms of transportation — rail, motor van, or air. Available records are to 
the contrary. . . . even a cursory survey of American industry . . . 
[reveals] that virtually all big industrial cities of the Nation are located 
on water transportation facilities and that the biggest freight-handling 
railroads of the Nation all get a substantial volume of their freight busi- 
ness from areas where both water and land freight transportation exist. 

The records show, I believe, that advent of water-freight transportation 
into areas backward in industrial development has been followed by wide- 
spread industrial development, and that advent of water transportation 
into areas already prospering . . . has increased industrial activity and 
brought added prosperity to existing enterprise. 

In other words, the trend found in the addition of water-freight trans- 
portation facilities to land-transportation facilities is toward increase in 
existing business and creation of opportunity for development of new busi- 
ness; and this in turn means more freight for all forms of transportation. 1 

TVA lends this view its vigorous support, for all the evidence indi- 
cates that an effective system of water transport contributes strongly 

1 American Waterways Operators, Inc., Inland Waterways — Facts and Figures, 
1950 (Washington, D. C), p. 51. 

River Transportation 105 

to the economic growth of a region, and incidentally to the total trans- 
portation facilities as well. 

Removal of Artificial Barriers to River 

It has been suggested that commerce on the river has 
not yet reached economic maturity, and that substantial further 
growth may yet be expected. At the same time, it must be noted that 
there are certain artificial barriers to full development of river traffic. 
Among these are the lack of joint rate and route arrangements be- 
tween land and water carriers, unduly high rail rates to or from river 
ports, and prompt establishment by overland carriers of low rates at 
the first threat of water competition. It is clear that such impediments 
must be modified or eliminated entirely if the shipping public is to 
realize fully the inherent advantage of water transportation. Accom- 
plishment of this in its initial phase is basically a research undertaking, 
for it must be determined whether a particular barrier results from 
transportation law or from regulatory practice, what its origins 
were, whether or not its effects are economically sound and justifiable, 
what remedies should be sought, and how the remedies may be put 
into effect. 

TVA by itself can take little direct action on these matters. It does 
not write transportation laws and it does not regulate commerce. It 
does not operate railroads, barge lines, or any other mode of trans- 
portation. Under section 22 of its act, however, TVA can report to 
the President and Congress on such problems, advising on desirable 
changes in public policy and laws. TVA's first effort in this regard 
was a series of reports on the interterritorial freight rate problem. 
Here water transportation was not involved, but rather uniform rail 
class rates were sought for the rate territories east of the Rocky Moun- 
tains. This was a matter which had long concerned the southern states, 
and it was the states which carried the case to the Interstate Com- 
merce Commission. TVA's reports were heavily used by the states in 
presenting their case. The case took many years — it was carried finally 
to the Supreme Court — but the result was a uniform freight classifi- 
cation and a single scale of distance rates to be applied to all class 
freight everywhere east of the Rockies. 

TVA can and does intervene in regulatory cases where policies 
affecting Tennessee River navigation are involved. One such case be- 
fore the Interstate Commerce Commission in which TVA is an in- 
tervener is the so-called Barge Grain Case. This action was brought 

106 Twenty Years of TVA 

by three common carrier barge lines to secure reduced rail rates on 
grain shipped into and from Ohio, Mississippi, and Tennessee River 
ports when the grain moves between those ports by barge. At present, 
grain arriving at Tennessee River ports by barge must pay the high 
local freight rates when transshipped, whereas grain arriving at these 
ports by rail has a transit privilege permitting it to be transshipped 
for much less than local rates. Some Mississippi River ports have 
so-called proportional rates allowing grain received by barge to be 
transshiped by rail at less than local rates. This puts Tennessee River 
ports which have no such proportional rates at a disadvantage and 
deprives many grain consumers of the full advantage of cheaper 
barge rates into the Southeast. Shippers and receivers, state farm 
bureaus, the United States Department of Agriculture, the Southern 
Governors' Conference, and port cities and their chambers of com- 
merce have pointed to the discrimination and intervened in the 

TVA is interested in this case because lowered freight costs lead- 
ing to reduced production costs and lower prices on grain would tend 
to improve economic conditions in and conserve the resources of the 
Southeast. Decreased feed costs in the region would encourage the 
shift from growing soil-depleting crops to the soil-building enter- 
prise of raising livestock. Reduced prices of milk, butter, eggs, meat, 
flour, and bread would raise nutrition standards and benefit the re- 
gion's consumers. Consignees situated inland from the river, includ- 
ing grain elevators, flour and feed mills, farmer co-operatives, and 
industrial users, would benefit from reduced grain rates, and new 
grain-consuming industries would develop in the region. 

Another important case involving rail and water carrier relation- 
ships in which TVA has intervened is the so-called Knoxville Switch- 
ing Case. Two railroads have sought to increase switching charges on 
interstate intraterminal traffic at Knoxville, Tennessee. The practical 
effect would be to increase the switching rate on only that traffic mov- 
ing to or from the Knoxville public-use terminal. Several Knoxville 
shippers have opposed the increase in an action before the ICC be- 
cause of the obvious discrimination against the river terminal and 
waterborne commerce. TVA has intervened on their behalf. While 
the proposed switching rate increase at Knoxville would affect a com- 
paratively small amount of the total Tennessee River traffic, TVA 
has felt that it was very important to maintain the principle of fair 
and nondiscriminatory treatment of river commerce. 

A decision in favor of the railroads by the ICC was appealed to 
the federal court. The court ruled that, while there was plenty of 

River Transportation 107 

evidence that the switching charges should be higher than they are, 
it was not conclusively shown that the switching charges on ex- 
barge traffic should be higher than on ex-rail traffic nor by how much. 
Because of the "inherent advantage" policy set out in the Transporta- 
tion Act of 1940, and because of the cost principles spelled out in a 
recent United States Supreme Court decision involving the rail ship- 
ment of ex-barge grain from Chicago eastward, the court said that the 
"actual difference in cost involved in switching ex-barge and ex-rail 
freight" must be determined. 2 The ICC re-opened the case as in- 
structed by the court, but before the matter could be heard again a 
compromise agreement was reached. 

Many other examples of TVA's specific and practical efforts to 
obtain the removal of some of the obstacles to full utilization of low- 
cost water transportation could be cited. Progress is necessarily slow 
in all such large-scale endeavors and seems to be particularly slow 
in the transportation field. The Transportation Act of 1940, which 
included a definite statement of national transportation policy, was a 
long step in the right direction. In the twelve years since the passage 
of this Act, however, not very much has been accomplished toward 
the co-ordination of water and land transportation. TVA believes that 
in the long run all modes of transportation, as well as the general 
public, will benefit if joint rates and routes between the rail and 
water carriers are established on a wide scale, if below-cost competi- 
tive rates obtained by legalistic devices are eliminated, and if other 
uneconomic practices indulged in by practically all types of carriers 
are done away with. TVA is only one of many public and private 
agencies that can assist by pinpointing some of the problems and 
suggesting solutions. 

2 Civil Action No. 801, Federal District Court for the Northern District of 
Alabama, Tennessee Valley Authority v. United States, March 12, 1951. 

Chapter 8 

The Power Program 

By O. S. Wessel 

Electric Power and the TVA: Some Basic Con- 

If the power program of the Tennessee Valley Au- 
thority is to be understood, it must be seen in its proper perspective. 
The controversial aspects of that program, attended as it has been for 
twenty years by almost constant public discussion, have given it such 
emphasis as to create the popular notion that TVA is simply a govern- 
ment-owned power system and nothing more. It is necessary, at the 
risk of some repetition, to emphasize the multiple-purpose character 
of TVA and its programs. The prime purpose of the new agency, as 
denned by the Act of 1933, was to bring the Tennessee River under 
control and to put it to work. Flood control and navigation were 
listed in the Act as primary activities, power production as secondary. 
Notwithstanding the prominent billing given to electric power in the 
years since 1933, it is important to remember that it is subservient 
to the primary purposes of flood control and navigation. 

Proof of power's secondary position is found in the method of 
operation of the river control system. Though the Office of Power is 
responsible for the physical operation of the system, the power people 
operate according to instructions from the Division of Water Control 
Planning in the Office of Engineering. The latter organization deter- 
mines the amount of storage space which must be provided at any 
given time in each reservoir in order to provide needed flood pro- 
tection. It also determines the water requirements needed to provide 
the minimum required depth in the navigation channel. If the power 
managers can operate the system in such a way as to meet the naviga- 
tion and flood protection requirements set up by the Chief Engineer 
and utilize the water to generate power at the same time, well and 
good; but if a conflict of interests develops, as it often does, naviga- 
tion and flood control come first. It is frequently necessary during 
the winter months to spill water in order to maintain storage space in 
the reservoirs against the possibility of future floods. Spilled water is 


The Power Program 109 

wasted water as far as power production is concerned, and a good 
deal of potential hydroelectric production is lost in this fashion nearly 
every year. This is the only way the system can operate if it is to pro- 
vide flood protection and navigation, however, and this is the way it 
does operate. 

The TV A Act and the Power Program 

The power business, regardless of who owns and oper- 
ates it, is a public business. Where private corporations have under- 
taken the job of electricity supply, they have done so by reason of 
privileges granted by the public. They use the public streets and 
highways as right-of-way for overhead and underground lines. They 
are given the right of eminent domain to secure land needed for their 
facilities. They are monopolies in the areas they serve, and are pro- 
tected in their monopoly privileges by state regulation or by local 
franchise. Their rates are not set by competition but by government 
action, and are designed to assure them a reasonable level of earnings 
on the facilities they provide. These privileges are granted by the 
public, not as a mark of favor, but in order that the companies can 
do an efficient job of providing electric service. 

The public character of electric service is dictated by the very 
nature and function of electricity. Electric power is not just another 
commercial product to be placed on the commodity market at the 
highest price it will bring. Electricity is energy and in this modern 
age it is a basic necessity of life. It provides many of the comforts of 
modern living. Full development of a community's commercial and 
industrial economy would be impossible without a plentiful supply. 
Every community is entitled to an adequate supply at reasonable 
rates. It is an absolute requirement for minimum national strength 
and security. 

It is for these reasons, then, that the electric business is a public 
business. Where the public interest and the private interest con- 
flict, as they sometimes do, the public interest must prevail. In the 
TVA Act, Congress recognized the public character of power supply 
and took steps to ensure that in the Tennessee Valley the public in- 
terest would be served. 

Section ga of the act authorized the TVA Board of Directors to 
provide and operate facilities for the generation of electric energy in 
order to avoid the waste of water power, and to transmit and market 
the power produced. Section 10 empowered the Board to sell any 
surplus power developed by TVA and to give preference in the sale 

no Twenty Years of TVA 

to states, counties, and municipalities, and to co-operative organiza- 
tions not organized or doing business for profit but primarily for 
the purpose of supplying electricity to their own members. To make 
sure that the benefits of this power were actually realized by the 
people, the act also authorized the Board to include in the con- 
tracts for sale of power such terms and conditions, including resale 
rate schedules, as were in its judgment necessary to carry out the 
purposes of the act. Section 11 reaffirmed the distribution policy set 
out in section 10, providing also that the power projects were to be 
considered primarily as for the benefit of the people of the region as 
a whole and particularly the domestic and rural consumers to whom 
the power could economically be made available. Sale of power to 
industry was to be a secondary purpose, to be utilized principally to 
secure revenue returns which would permit domestic and rural use at 
the lowest possible rates. 

In sections 10 and 11 of the act, therefore, Congress made clear 
its intention to preserve for the people the benefits which would re- 
sult from the development of the Tennessee River. This was a re- 
affirmation of a general policy first laid down by Congress in the 
Reclamation Act of 1906. These are the so-called preference provi- 
sions of the act and they are generally similar to the preference 
clauses contained in other laws relating to the sale of power generated 
at government-owned dams. Two categories of preference are set out: 
first, municipalities, co-operatives, and other public agencies not dis- 
tributing electricity for profit were to have first call on the power TVA 
produced; and second, the power was to be considered primarily for 
the benefit of the domestic and rural consumer. The preference pro- 
visions therefore affirm the government's policy to produce and sell 
power for the benefit of the consumer, and continue the chain of 
responsibility for getting this power to the consumer through local 
agencies whose basic objectives are widespread use at low rates. It is 
worthy of emphasis that the act indicates clearly that Congress in- 
tended the function of distributing electricity to the ultimate con- 
sumer to be decentralized. TVA was to produce the power, but 
local agencies were to be given the job of distributing it to the ultimate 

Section 10 contains another important provision which authorizes 
the TVA Board of Directors to make studies and experiments to 
promote the wider and better utilization of electric power for agri- 
cultural and domestic use and for small industries. This section 
also directed TVA to co-operate with state governments and their 
subdivisions, with educational and research institutions, and with co- 

The Power Program hi 

operatives or other organizations, in the application of electric power 
to the fuller and better balanced development of the resources of the 
region. Here is a clear statement of the principle that electricity was 
to be one of the tools to be used in helping the region to improve its 
economic status. This was to be accomplished by the application of 
low rates, the benefits of which were to be spread as widely as possible. 
The act further provided that the proceeds from the sale of 
power were to be used to assist in liquidating the cost of the projects. 
Section ga contains a preliminary statement on this subject which 
section 14 makes explicit in these terms: 

It is hereby declared to be the policy of this Act that, in order, as soon as 
practicable, to make the power projects self-supporting and self-liquidating, 
the surplus power shall be sold at rates which, in the opinion of the board, 
when applied to the normal capacity of the Authority's power facilities, 
will produce gross revenues in excess of the cost of production of said 
power. . . . 

This policy was again affirmed by Congress in the Appropriation Act 
of 1948, which included a requirement that TVA pay into the 
federal treasury from net power revenue amounts which would equal 
all appropriations made for power purposes. 

Acquisition of Private Utility Properties 

At the time the TVA Act was passed there were two 
dams on the Tennessee River, one built by the United States govern- 
ment, the other by a power company. By the terms of the act, the 
government-owned Wilson Dam was to be transferred from the War 
Department to TVA. The act also authorized TVA to proceed with 
the construction of several new dams, including Norris and Wheeler, 
and to connect these generating plants one with another by the con- 
struction of transmission lines. TVA could also build transmission 
lines to carry the power to market. 

One of the first big tasks confronting TVA was the development 
of a suitable market wherein its power could be sold. A few scattered 
municipal electric systems were operating in the region in 1933, and 
these were among the first to enter into power contracts with TVA. 
There were of course no electric co-operatives at that time. Most of 
the area was served by a few rather large privately owned power com- 
panies, which were controlled by big holding companies. Over the 
years, and particularly in the period immediately preceding the war, 
TVA and the municipal and co-operative distributors of TVA power 

112 Twenty Years of TVA 

purchased practically all of the privately owned utility company pro- 
perties in the Valley power service area. Only two small private com- 
panies remain, and they distribute TVA power under contracts which 
are practically identical to the Authority's standard municipal power 
contract. Altogether, TVA and the distributors paid $125,000,000 for 
the acquisition of utility company properties. The usual pattern has 
been for TVA to buy the generation and transmission facilities and 
the local agencies — municipalities and co-operatives — to buy the dis- 
tribution properties. The last major acquisition was in 1945, when 
properties of the East Tennessee Light and Power Company were 
acquired. The boundaries of the service area have not changed mate- 
rially since that time, notwithstanding a number of requests, princi- 
pally from municipalities and co-operatives, that the area be extended. 

The Distribution System 

As a result of the transfers of utility properties to pub- 
lic ownership, TVA, with Congressional approval, has assumed a re- 
sponsibility to supply the power requirements of the region. The util- 
ity properties in question were purchased outright: TVA bought the 
generating plants and transmission lines and integrated them into its 
system; and at the same time the municipalities and co-operatives — the 
preferred customers under the act — acquired the distribution systems. 

At present, there are 150 electric systems distributing TVA power 
— 97 municipals, 51 co-operatives, and two small privately owned utili- 
ties. Their investment in distribution facilities totals almost $400,000,- 
000. The area they serve covers practically the entire State of Ten- 
nessee, the northeastern quarter of Mississippi, the northern part of 
Alabama (roughly one-fourth of the whole state), the northwestern 
corner of Georgia, very limited areas in western North Carolina and 
Virginia, and the southwestern part of Kentucky. Altogether, the dis- 
tribution area for TVA power covers about 80,000 square miles. It is 
therefore about double the drainage area of the Tennessee River 
watershed. Within this area live some five million people and there 
are more than one-and-a-quarter million electric consumers in the 

The Tennessee Valley Authority and its distributors combine to 
form the largest power system in the country. In 1952 the TVA system 
produced 21,000,000,000 kilowatt-hours, or roughly fourteen times 
as much energy as the same area produced in 1933. When TVA was 
started, this area had a generating capacity of about 800,000 kilowatts 
and there were many who thought that was enough. These people 

The Power Program i 1 3 

expressed fear that TVA would create a power surplus — power that 
would never be utilized. In the past twenty years TVA has added 
tremendously to the power-producing capacity of the region: the in- 
crease has been from 800,000 kilowatts to 4,500,000 kilowatts, or nearly 
six-fold; and new facilities currently being installed will bring the 
total system capacity to nearly 10,000,000 kilowatts. Even then, power 
will be in short supply. Demand has outrun supply substantially for 
twenty years notwithstanding large new installations, and there is no 
sign of approaching equilibrium. If there is one thing to be learned 
from the experience of the Tennessee Valley, it is that there is ap- 
parently no such thing as an overabundance of electricity. 

The TVA Power Contract 

The Act of 1933 specifically states that TVA is to mar- 
ket its power in such a way as to encourage widespread use at the 
lowest practicable rates. TVA could not possibly have followed this 
Congressional directive if it had not set up certain limitations on 
what could be done with the power after the distributor bought it. 
The instrument which assures achievement of the objectives of wide- 
spread use and low rates is the power contract. The contract generally 
covers a period of twenty years. The following discussion of contract 
provisions applies only to municipal distributors, but the contracts for 
co-operatives are similar. One of the remarkable things about this 
contract is the fact that it has required relatively few revisions over 
the years. Modifications have been made, of course, to clarify certain 
points and to make the document more workable, but the contract of 
today is basically the same as the first agreement signed with the City 
of Tupelo, Mississippi, nearly twenty years ago. 

Purpose of Contract 

The purpose of the contract is stated thus (in section 


10. Purpose of Contract: It is hereby recognized and declared that, pur- 
suant to the obligations imposed by the Tennessee Valley Authority Act 
of 1933 as amended, Municipality's operation of a municipal electric dis- 
tribution system and Authority's wholesale service thereto are undertaken 
primarily for the benefit of ratepayers and that Municipality shall receive 
from the operation thereof for the benefit of its General Fund, to be used 
for any permissible municipal purpose, only (a) a return on any invest- 
ment made from general funds in the electric system, and (b) an amount 

ii4 Twenty Years of TVA 

in lieu of taxes, representing a fair share of the cost of government prop- 
erly to be borne by such system. In accordance with these principles, 
which are mutually recognized as of the essence of this agreement, Munici- 
pality agrees to operate its electric system and to maintain its financial 
accounts and affairs in full and strict accordance with the provisions of 
this Power Contract. 

Here is a clear statement of the principle that the electric system 
will be operated for the benefit of the ratepayer. The only amounts 
which the city may take from electric operations are a return on 
funds which it has actually invested in the electric system and an 
amount in lieu of taxes. Most of the municipal systems in the TVA 
area have been financed by revenue bonds which are an obligation 
of the system itself and not the city; consequently most cities have not 
invested money in their electric systems and therefore have no in- 
vestment on which a return is allowed. At the end of the fiscal year 
1952, the total municipal investment in all electric systems distribut- 
ing TVA power was only slightly more than $1,000,000. This compared 
with a total long-term debt of nearly $75,000,000 for all municipal 
systems. Municipal investments therefore are not a particularly im- 
portant factor in the financing of these municipal systems. The co- 
operative contracts of course do not contain the municipal investment 

The purpose of the "in lieu of taxes" (tax equivalent) provision 
of the contract is to permit the electric system to assume a share of the 
cost of city government. As an arm of the city government, the system 
of course pays no taxes, but if it were privately owned, it would be 
subject to taxes. The intention is to compensate the city for this loss 
of tax revenue. The formula for determining the tax equivalent is set 
forth in section 10 of the contract. Briefly stated, it permits payment 
to the city of an amount obtained by applying the city, county, and 
state ad valorem tax rates to the book value of the electric system 
(original cost), less the depreciation reserve. How this arrangement 
works will be examined later on. 

Disposition of Revenues 

Another very important feature of the TVA power 
contract, and one quite different from anything found in most whole- 
sale agreements, relates to the disposition of revenues received by the 
distributor. It is agreed that revenues may be used first for the pay- 
ment of operating expenses — salaries, wages, materials and supplies, 

The Power Program 115 

the cost of power, and the like. Provision is made further for the 
payment of interest and principal on the long-term debt, for an allow- 
ance for depreciation of the properties, and for payments in lieu of 
taxes. Any amounts remaining after these requirements have been 
met are considered as surplus revenues and may be used for three 
general purposes: first, for new construction for lines to serve new 
consumers, or facilities to strengthen service to old; second, for the 
further reduction of rates; third, subject to the consent of TVA, for 
the retirement of system indebtedness prior to maturity. These pro- 
visions assure that the benefits of electric system operations will be 
passed on to the consumer. About half of the municipal systems are 
operating under rates below the level included in their original con- 
tracts. Many of them are also well ahead of schedule on the repayment 
of long-term indebtedness; in fact, some have completely retired their 
debt. None has ever defaulted on a debt payment. 

In the years since the war ended, most distributors have been 
investing a high percentage of their surplus revenues in new plant. 
Part of this money has been needed for extension of service; part has 
been used to strengthen existing facilities. The distribution systems 
which were acquired from utility companies in many cases had to be 
entirely rebuilt, for these systems, designed to handle the loads which 
prevailed twenty to thirty years ago, simply did not have the capacity 
to carry the tremendously greater loads of today. 

Under the contract the distributor agrees to keep its books accord- 
ing to a uniform system of accounts developed by TVA. The system 
is patterned after the accounting system prescribed by the Federal 
Power Commission for electric utilities, public and private. The dis- 
tributors agree also to make monthly statistical and financial reports, 
so that TVA can be informed of their progress. Finally, municipalities 
agree to maintain a separate fund for revenues from electric oper- 
ations and not to mingle power funds or accounts with those of other 
municipal operations. 

TVA has been subjected to criticism in some quarters because of 
the limitations which the power contract places on the local use of 
electricity revenues. These limitations are necessary, however, if the 
basic objective of securing widespread use at low rates is to be 
achieved. Outside the TVA area many cities keep electricity rates high 
and apply surplus earnings to the costs of general government. The 
TVA power contract aims at elimination of this practice by pro- 
scribing high retail rates and by limiting the uses which may be made 
of power system earnings. In this connection it is only fair to point 
out that local distributors enter into an agreement to purchase TVA 

n6 Twenty Years of TVA 

power of their own free will, and usually after a vote by the people. 
Any municipality which considers the terms of the agreement onerous 
has the option of rejecting it. Two cities in the TVA power service 
area have done this; owning and operating their own power plants, 
they have chosen to use their electric revenues to finance operation 
of the general government, and so have not joined the TVA system. 
The fact that 148 local distributors have joined proves the presence 
of something besides force. These distributors joined because they 
concluded that the best interests of the local communities would be 
served by so doing. The record of successful distribution operators 
and the progress made toward the twin objectives of widespread use 
and low rates would indicate the wisdom of their decision. 

Wholesale Rate 

Included in the power contract are the wholesale rate 
at which TVA sells the power to the distributor and the retail rates 
at which the power is resold to the ultimate consumer. The wholesale 
rate is a blanket rate, applicable throughout the entire power area. 
TVA justifies application of a uniform rate, in the face of apparent 
variations in the cost of delivered power over its distribution area, in 
terms of its uniform responsibility as a supplier over the entire area 
served. TVA was given the job of assisting in the development of 
the resources of a whole region. It has interpreted the directive of 
Congress as meaning that, as a matter of general policy, all parts of 
the region should be treated equitably, that no part should be favored 
over another. It has applied the same policy in its approach to all 
phases of regional development. A uniform wholesale rate avoids giv- 
ing an advantage based on the fortuitous fact of nearness to place of 

There were other and more important reasons for a uniform 
wholesale rate. Much of TVA's transmission system is required to 
connect the several dozen generating plants with one another. Only 
in this way can the plants be operated in an integrated system, achiev- 
ing the economies and the continuous production of power which 
go with integration. Most wholesale customers receive power from the 
high-voltage transmission system and not from any particular generat- 
ing plant. Thus, distance from a generating plant is less significant 
than distance from some point on the main transmission system. Any 
differences in cost of service caused by differences in distance from 
the main transmission system would be measured in fractions of a mill 
per kilowatt-hour, and so would be relatively small. 

The Power Program 117 

As a practical matter, it would be impossible to develop rates 
based on the cost of service to individual consumers, whether whole- 
sale or retail. For one thing, much of the power supplier's investment 
is in equipment which is used in common by a great number of con- 
sumers. For another, consumers vary greatly in their use characteristics. 
Some consumers are near the point of supply, others are far away; 
some use a great deal of power, others use smaller amounts; some use 
more of their power requirements during peak hours — the period when 
the combined demand of all consumers served by the system is greatest 
— than others. In fact, an individual customer's use characteristics may 
differ from one day to the next or one month to the next. All of 
these factors affect costs. It was for these reasons, plus the desire to 
avoid favoring one part of the region over another, that TVA adopted 
a uniform wholesale rate. 

In designing the wholesale rate, due consideration was given to 
all factors of cost, both of production and of transmission. These costs 
included all the expenses of operating a power system which would 
develop the power potential of the Tennessee River system. In addi- 
tion, allowance was made for depreciation, interest, and taxes. At the 
same time TVA was determining the total cost of developing the 
power, it was calculating the amount of power that could be produced 
by the system of dams under construction. Stream-flow records which 
were available for many years back were very useful in arriving at 
estimates of potential power production. 

The soundness of the original wholesale rate is attested by the fact 
that over the first nineteen years of operation the power system has 
earned a return of more than four per cent on the investment in 
facilities chargeable to power, and by the further fact that the whole- 
sale rate paid by municipalities and co-operatives today is essentially 
the same as the rate designed in 1933. The only change involved a 
relatively minor adjustment made in 1952 to reflect increased costs 
to TVA as a result of more extensive use of power produced by steam- 
electric generating stations. 

Actually, the wholesale rate applied by TVA is not greatly below 
the wholesale rate charged by some of the more progressive private 
utility companies. The rates paid by all municipal and co-operative 
distributors of TVA power in 1952 ranged from 31/2 to 6 mills per 
kilowatt-hour. That is low, but there are a few companies that ap- 
proximate it. One indeed claims that its rate to co-operatives is lower 
than TVA's. This company has been moving in the right direction; 
its ability to do so makes one wonder about the charge of some utility 
spokesmen that TVA sells its power below cost. 

n8 Twenty Years of TVA 

Retail Rates 

The retail rates applied by the distributors of TVA 
power — the rates applicable to the residential, commercial, and in- 
dustrial consumers — are among the lowest in the nation. Their design 
involved the application of principles of rate-making which repre- 
sented rather radical departures from the procedures usually prevail- 
ing prior to 1933. Up to the time TVA was created, the utility industry 
generally had applied high rates. Rates were lowered only when it 
could be demonstrated that the utility's return was excessive, and 
then they were reduced only to the extent necessary to eliminate the 
excess earnings. It was clear to the TVA Board that if the objective of 
widespread use was to be attained, it would be necessary to adopt a 
dynamic approach, one in which low rates would be used to stimulate 
increased use, in place of the time-honored procedure of waiting 
for increased use to justify lower rates. 

The idea of encouraging increased consumer demand for elec- 
tricity with a lower price did not originate with TVA. A few electric 
systems — principally municipal systems — had experimented with the 
principle and had found it sound. By making available large quantities 
of power at low rates, however, TVA was able to introduce the low- 
rate policy on a larger scale than had ever been tried before in the 
electrical business. In adopting this policy, TVA relied on greatly 
increased use, for which both lower rates and proper promotional 
activity provided the impetus, to produce the revenues necessary to 
cover costs. The introduction of the new low rates was, therefore, a 
calculated risk. 

That the TVA retail rates have covered costs adequately is evident 
from the excellent record established by the municipal and co- 
operative systems distributing TVA power. In the 1952 fiscal year, for 
example, the combined gross revenues of all these systems was 
$103,000,000; the net income, after paying all expenses including de- 
preciation, taxes, and interest, was over $17,000,000. The effect on con- 
sumer use likewise has been that anticipated. When the TVA rates 
were first introduced, the average residential use and average resi- 
dential rate in the present power service area were about the same as 
in the United States as a whole: 600 kilowatt-hours a year at six cents 
a kilowatt-hour. Today the average use in the TVA area exceeds 4,000 
kilowatt-hours, or nearly seven times what it was in 1933. Average use 
in the nation has climbed to 2,100 kilowatt-hours, for an increase of 
three and one-half times. Use of electricity therefore has grown twice 
as fast in the Tennessee Valley region as in the country as a whole 

The Power Program 119 

during the last twenty years. Moreover, even though the average resi- 
dential consumer in the TVA area uses twice as much electricity as 
his counterpart in the nation, he still pays a slightly lower total 

Another important feature of TVA's rate policy is that the same 
promotional rates are applied in rural as in urban areas. In the 
earlier years, this policy was helpful in persuading rural people to sign 
up for electric service; now it is principally useful in encouraging peo- 
ple, rural as well as urban, to use more electricity. Here is another 
departure from general practice in the utility industry which has 
worked out very satisfactorily. 

Effect of TVA Rate Policy on Utility Rates 

Though perhaps the best proof that the low rate — high 
use principle works is to be found in the experience of the municipali- 
ties and co-operatives that distribute TVA power, there is ample 
evidence that it applies to privately owned utilities as well. Shortly 
after TVA announced its wholesale and retail rates in 1933, several 
of the large power companies in and adjacent to the TVA power 
service area reduced their rates sharply. They coupled their announce- 
ment of the new low rates with well-designed appliance-selling cam- 
paigns, and the customers responded by installing appliances as never 
before. The result was increased sales, increased revenue, and greater 
income for the companies. 

Two small privately owned power companies in the TVA area, 
one at Bells, the other at Franklin, both in Tennessee, offer an in- 
structive case. These companies pay all the expenses that any other 
privately owned utility must pay, including federal income and other 
taxes. They operate under contracts which are nearly identical to 
that applicable to the TVA municipal systems, and they apply the 
same retail rates as other distributors of TVA — one of them, in fact, 
has adopted retail rates below the basic level. These companies have 
been very successful financially. Their record indicates that privately 
owned companies, even small ones, can apply low rates, develop in- 
creased use in the process, and obtain more than enough revenues 
to cover all costs. Incidentally, the average residential use of the Bells 
company for 1952 was about double the national average, that of the 
Franklin company almost triple. 

The extent to which TVA rates have influenced rates elsewhere is 
very difficult to measure. Considerable evidence is available to show 
that the influence has been felt, and it will continue to be felt so 

120 Twenty Years of TVA 

long as TVA and its distributors continue to demonstrate that low 
electric rates are a financially sound business proposition. 

Utilization of Electricity in the TVA Area 

The great majority of ultimate consumers in the Ten- 
nessee Valley are of course served by the municipal and co-operative 
distributors. All of the industries in Chattanooga, for example, are 
served by that city's municipal electric system, and the same type of 
local service applies for other communities in the Valley. Moreover, 
most government needs, such as those for post offices, public buildings, 
housing developments, and the like, are served by the local distribu- 
tors. In addition to the municipal and co-operative distributors, how- 
ever, TVA does serve some two dozen industries and federal agencies 
directly. For the most part these are enterprises that use very large 
quantities of electricity. They are not necessarily large operations 
in the sense that they employ large numbers of people or have huge 
factories, although some of them do; it is the size of their electric 
loads that occasions direct service by TVA. 

There are several reasons why size is a decisive factor. First, very 
substantial investments in service facilities are involved. Most of this 
investment is in generating plants, transmission lines, and substations, 
which TVA must provide. This means that, regardless of who supplies 
the service, TVA must assume the major financial risk in providing 
it. Second, variations in the load of these consumers have an impor- 
tant effect on TVA system operations, and it would be very cumber- 
some to attempt to work out load schedules through an intermediary 
contractor. Third, many of these large consumers are able to use non- 
primary power, and only TVA can determine when and in what quan- 
tities this kind of power will be available. Fourth, TVA alone can 
know what the power costs to produce and therefore the rates at 
which it must be sold. Finally, the operating economies and the in- 
come which TVA realizes by reason of direct service to these large 
loads make possible the application of lower rates to the preferred 
consumers: if TVA provides the service, all local distributors benefit, 
but if one distributor supplied the service, that system alone would 

Sales to Federal Agencies 

The principal federal agencies whose use of power is so 
large as to require direct service are the Atomic Energy Commission; 
the Arnold Engineering Development Center at Tullahoma, Ten- 
nessee — an Air Force wind tunnel project; and TVA's fertilizer plant 

The Power Program 121 

at Muscle Shoals. A major objective of TVA is to contribute to the 
national defense, and almost all of the federal agencies that use large 
quantities of power are defense agencies. Much of the money which 
Congress has appropriated for TVA in recent years has been for the 
express purpose of providing the generating facilities and transmission 
lines to serve large federal loads, such as the atomic energy plants. 

The federal defense plants require fantastic amounts of electricity. 
During the last year of the war TVA delivered 1,600,000,000 kilowatt- 
hours to the Oak Ridge plant of the AEC. That was a tremendous 
amount of power, but it has been dwarfed by the expansion of AEC's 
requirements since the end of the war. In the year ending with 
June 1952, TVA supplied the Oak Ridge installation with almost 
5,000,000,000 kilowatt-hours; and by 1956 the Oak Ridge plant, plus 
the one nearing completion at Paducah, Kentucky, will require 
30,000,000,000 kilowatt-hours. If to this load are added the require- 
ments of other federal defense agencies in the region, TVA by 1956 will 
be providing some 31,000,000,000 kilowatt-hours to the federal govern- 
ment. It becomes difficult to grasp the significance of figures of this 
magnitude. Perhaps they will have more meaning in this context: 
by 1956 the TVA will be supplying as much electric energy to the 
federal defense agencies in the Valley as was sold to all consumers in 
the State of Pennsylvania in 1952. In only one state (New York) 
last year did total sales exceed what TVA expects shortly to be 
selling to a handful of government agencies. 

The low rates offered by TVA to AEC have of course meant sub- 
stantial savings to the government in the cost of producing atomic 
energy. And these savings have not been limited to the power which 
TVA supplies directly, for TVA's rates have set a pattern for those 
applied to AEC loads served by privately owned utilities. A little over 
a third of the power used by the Paducah installation and the full 
power requirements for the new AEC plant in Ohio will be pro- 
vided by utility companies. In both cases the rates offered by the 
companies are almost as low as those offered by TVA, and they are 
substantially lower than utility companies normally charge, even for 
very large loads. When it is considered that a reduction of one mill 
per kilowatt-hour in the sales to AEC alone results in a saving to 
the government of $50,000,000 a year, the value of the TVA example 
in providing large amounts of power at low rates can be understood. 

Sales to Industry 

The TVA Act, it will be recalled, provides for the 
sale of power to industry, but at the same time clearly states that sale 

122 Twenty Years of TVA 

to such consumers shall be utilized principally to secure revenue 
returns which will permit domestic and rural use at the lowest pos- 
sible rates. It is evident from this and other provisions of the Act 
that Congress did not overlook the importance of industry in the eco- 
nomic development of the Tennessee Valley. It is also evident that 
Congress viewed the power latent in the river as a public resource 
that was not to be monopolized by a few industries — or by private utili- 
ties — even if such customers were willing to take all the power TVA 
could make available. 

Virtually all industries in the region are served by the local dis- 
tributors of TVA power, but TVA from its early years has sold power 
directly to a few large industrial users. There are now about 20 such 
industries; they purchased somewhat less than 5,000,000,000 kilowatt- 
hours of electricity in 1945 and less than 6,500,000,000 in 1952. Thus 
sales of power to industry are much less in amount, and are growing 
less rapidly, than sales to the preferred categories of purchasers. 

Direct sales to industry were particularly important in the early 
and formative years, when TVA was plagued by injunctions that pre- 
vented the orderly development of a market among its preference cus- 
tomers. Furthermore, at that time a large proportion of the power 
available on the system was not firm power — that is, power which can 
be made available one hundred per cent of the time. Because the 
system was almost exclusively hydro, there was a great deal of second- 
ary power. Secondary power, as such, is not suitable for the ordinary 
requirements of municipalities and co-operatives because the con- 
sumers they serve want service every hour of the day and every day 
of the year. There are, however, some industries which can use this 
secondary power profitably. They are willing to have their service 
interrupted occasionally because, in so doing, they obtain the benefits 
of the lower rates applicable to secondary power. Obviously, there is 
an advantage in developing a market for this secondary power. Water 
which otherwise would be wasted is used to generate power, while the 
revenues obtained can be used to offset some of the costs of service. 
In the long run this makes possible lower rates to the users of primary 

The industrial power contract is tailored to the needs of each 
customer. Because of the variations in quality and quantity of power, 
it is difficult to compare the provisions of one contract with the pro- 
visions of another. In recent years industrial rates have been rising, 
chiefly because hydro power is reserved for the preferred consumers 
and more and more reliance is placed upon steam power to supply 
industrial loads. By way of illustration, one of the earliest industrial 

The Power Program 123 

power contracts provided for the sale of a combination of firm power 
and secondary power. The rate for firm power averaged 3.1 mills per 
kilowatt-hour; today the rate for that same block of firm power would 
average 4.1 mills per kilowatt-hour. The secondary power in the early 
contract was guaranteed to be available 75 per cent of the time during 
a 10-year period; the rate was 2.2 mills per kilowatt-hour, about 30 per 
cent less than the firm power rate. This very low-cost secondary power 
is no longer offered, because the steam plants added to the system 
have firmed up much of the hydro power. 

The rates offered by TVA to industries served directly are virtually 
the same for the same quality of power as the rates offered by the 
municipal and co-operative distributors to the industries they serve. 
It is appropriate to note in this connection that the lure of low-cost 
power has not been a determining factor in attracting industries from 
other regions to the Valley. The region is growing industrially and 
the availability of TVA power has contributed to that growth. The fact 
remains, however, that except for a few industries that require very 
large amounts of power, the cost of electricity is so small in relation 
to the cost of labor, raw materials, transportation, and so forth, that 
power savings are not a significant factor in determining the location 
of industry. The people of New England from time to time have ex- 
pressed concern that their industries are moving South. So far as is 
known, none of these industries has moved into the Tennessee Val- 
ley; and those which have relocated in other parts of the South have 
moved because of economic factors much more compelling than low 
power rates. 

Transactions with Other Utilities 

The TVA power system is connected at a number of 
points with utility companies serving adjacent areas. The intercon- 
nections make possible the interchange of power between TVA and 
other utilities whenever such transactions are advantageous. Initially, 
TVA negotiated for the sale of firm power to other utility systems to 
avoid the wasting of power while seeking arrangements for serving 
preferred consumers. All contracts for the sale of power outside the 
TVA area were for short periods, generally five years or less, and 
included rights of cancellation by either party. Because of the tremen- 
dous growth in the use of electricity in the TVA area during the last 
ten years, all contracts for the sale of firm power outside the area have 
been terminated. 

Even though TVA no longer supplies firm power to neighboring 

124 Twenty Years of TVA 

systems, the interconnections are now being used more extensively 
than ever before. The major use of these interconnections is for econ- 
omy interchange. The purpose of economy interchange is simple, 
though its workings are often complex. Practically all large utilities 
operate a number of generating plants, as does TVA. Generally speak- 
ing, the hydro plants are most economical to operate, the modern 
steam plants are next, and the older plants are least economical. The 
purpose of economy interchange between two power systems is to ar- 
range for the operation of the most economical plants on both systems 
before either system operates the less economical ones. The savings 
from this kind of operation normally are shared by the two systems. 
Incidentally the arrangement provides an example of resource conser- 
vation, since use of the most economical plants results in less coal 
consumption. This was a particularly important consideration during 
the war. 

Among the most important arrangements between TVA and the 
interconnected power systems are those for emergency and mainte- 
nance stand-by. If a generator fails on one system, the power deficit 
can usually be made up by supply from another system. Too, the 
various systems may schedule their periodic shutdowns for major 
maintenance so they can continue to be mutually supporting. The 
fact that different systems have their peak loads at different hours of 
the day or at different seasons of the year provides the basis for other 
interchange arrangements. An agreement which takes varying peak 
loads into account enables each of the contracting systems to meet 
its power requirements with less generating capacity and less invest- 
ment than if it operated independently. 

One of the most dramatic uses for the system of interconnections 
is found in time of war or defense emergency. The situation today 
offers an excellent example. New atomic energy facilities in the Ten- 
nessee Valley are being completed faster than the new generating 
plants being built to supply them with electricity. In order to keep 
the great defense projects operating without interruption, TVA is 
using its transmission system to import power from other regions. A 
number of private utilities are co-operating in this program. 

Growth in the Region's Power Use 

In 1933 the region now supplied with TVA power con- 
sumed 1,500,000,000 kilowatt-hours of electricity; in 1945, the peak 
year of World War II, the area's requirements totaled 11,500,000,000 
kilowatt-hours; in 1952 requirements reached 23,000,000,000 kilowatt- 

The Power Program 125 

hours; and by 1956 it is estimated the region will need 58,000,000,000 
kilowatt-hours. The trend may be seen in the accompanying tabula- 
tion of the region's power requirements, which will repay careful ex- 
amination. There it can be observed that the local distributors, the 
primary category of preferred customers, almost trebled their require- 
ments from 1945 to 1952, and that they are expected to experience 
an increase of approximately sixty per cent from 1952 to 1956. The 
federal agencies, the second preferred category, more than doubled 
their consumption from 1945 to 1952, and will multiply their require- 
ments by more than five between 1952 and 1956. Industries directly 
served are increasing steadily, but at a much less rapid rate than the 
preferred customers. The total effect is one of an extremely rapid 
growth in regional electric power requirements, particularly from 
1952 to 1956, when the full impact of the national defense effort will 
be felt by the TVA power system. 

Table 2 
TVA System Power Requirements, 1 945-1 956 

(Millions of Kilowatt-Hours) 

Fiscal Year 

'945 1952 1956 

Municipalities and Cooperatives 




Federal Agencies 




Directly Served Industries 








Transmission Losses 




Total TVA Area 


Delivered to Utilities 



Total System Requirements 




The figures of the table acquire added meaning when cast in more 
familiar terms. In 1933 the homes and farms in what is now the TVA 
service area used about 150,000,000 kilowatt-hours of electricity, and 
commerce and industry (excluding Aluminum Company of America) 
used about 750,000,000 kilowatt-hours. None of this was TVA power. 
By 1941 home and farm use had increased to about 550,000,000 
kilowatt-hours, all but a little of it served by TVA distributors; and 
commerce and industry used about 1,700,000,000 kilowatt-hours. By 
1946 home and farm use totaled 1,000,000,000 kilowatt-hours, while 
commercial and industrial use totaled 2,300,000,000 kilowatt-hours. In 

126 Twenty Years of TVA 

1952 homes and farms used 4,200,000,000 kilowatt-hours, commerce 
and industry 4,800,000,000 kilowatt-hours. The 1956 forecasts antici- 
pate home and farm use of 7,200,000,000 kilowatt-hours, and com- 
mercial and industrial use of 7,300,000,000 kilowatt-hours. 

In 1933 the utility companies were serving 225,000 homes and farms 
in the Valley; by 1946 the distributors of TVA power were serving 
570,000, and by 1952 more than 1,100,000. Many of these additional 
customers represent new homes, but the majority are homes that did 
not have electricity in 1933. Since 1946, nearly 300,000 farms have 
been electrified. About 90 per cent of the farms now have electricity 
as compared with 3 per cent in 1933. In 1933 average annual use 
among homes in the region was 600 kilowatt-hours; twenty years later 
it averaged about 4,200 kilowatt-hours per year. Thus five times as 
many homes are electrified, and each uses on the average about seven 
times as much electricity. 

Low rates have, of course, been a prime factor in the increased 
use of electricity in the Tennessee Valley, but low rates alone do not 
provide a complete answer. TVA and the distributors of TVA power 
have gone to great effort to show the people of the region how they 
can obtain the full benefits of electricity. On the one hand, they have 
sought to help the consumer to make the most effective use of low-cost 
power; and on the other, they have co-operated with manufacturers, 
distributors, and appliance dealers in developing and popularizing 
home and farm electrical equipment. The educational phase of the 
program is conducted through a variety of channels. In 1952, to illus- 
trate, 850 meetings were conducted for residential and farm consum- 
ers; these were attended by 60,000 people, who witnessed demon- 
strations in the use of electrical appliances, proper wiring, and the 
utilization of electricity to save labor and increase farm production. 
The schools likewise provide an effective demonstration medium, and 
in the last few years several hundred schools throughout the Valley 
have been assisted in improving their lighting, planning and installing 
kitchen equipment, and utilizing electricity in their cafeterias. In these 
activities representatives of TVA and the local distributors work 
closely with the county agents and home agents of the Extension 
Service. There is general agreement that the electrical development 
program has been highly successful in furthering consumer under- 
standing of the potentialities of low-cost electricity for daily living. 

On the technical side, and as a single illustration of a rather varied 
activity, the TVA has conducted considerable research both jointly 
and by contract with the University of Tennessee. A current project 
centers attention on the heat pump, a device which in winter uses 

The Power Program 127 

heat from the earth, from ground water, or from the air to heat homes 
and offices; in the summer, the same device operates in reverse to 
provide cool air. There have been many such efforts, some of them 
highly successful, to ameliorate living conditions through the appli- 
cation of low-cost electricity to improved appliances and equipment. 
This phase of the program, though less important than its educational 
counterpart, has not been without its effect on the increase in the 
use of electricity in the region. 

Power Supply 

To meet the fabulous growth in power use, TVA is 
well along in an unprecedented construction program. The agency 
ended World War II with about 2,500,000 kilowatts of generating ca- 
pacity. Contrary to expectation and forecast, the postwar slump in the 
demand for power which occurred in 1945 was of no great consequence: 
industrial production continued to increase, new homes continued to 
be built, and the market for electrical appliances boomed. Present ca- 
pacity is about 5,000,000 kilowatts; construction under way or author- 
ized by Congress will increase generating capacity to nearly 10,000,000 
kilowatts by 1956. 

Unfortunately, there is a limit to the amount of power the Tennes- 
see River system can produce, and that limit is close at hand. A few 
undeveloped hydroelectric sites remain in the region, but their power 
potential is almost negligible in relation to growing power needs. 
The normal peace-time requirements of the TVA power service area 
are expected to grow at a rate of about 750,000 kilowatts a year; and 
TVA has a continuing responsibility to serve the growing demand. 
As a long step toward meeting its obligation, TVA is building seven 
large steam-electric generating stations. By early 1956 about 60 per cent 
of its generating capacity will be in steam plants. 

There appears to be widespread misunderstanding about the policy 
under which TVA, an agency responsible for the multipurpose con- 
trol of the Tennessee River system, constructs steam-generating capac- 
ity on such a large scale. Legal authorization for the policy is found 
in the original TVA Act, in numerous Congressional authorizations 
of the acquisition of existing steam plants, and in Congressional ap- 
propriations for the construction of new steam plants. The evidence 
is ample that Congress for many years has contemplated that TVA 
would buy or build and operate the steam plants necessary to meet 
its responsibility to supply the region's power requirements. TVA's 
construction and operation of steam plants does not, of course, reduce 

128 Twenty Years of TV A 

in any way its responsibility for flood control and navigation or for 
its other regional development activities. 

It is essential for continued economic growth of the region that 
power costs be kept as low as possible. Since steam plants are necessary 
to supply the region's power requirements, it is important that all the 
advances in steam plant engineering be reflected in their design, 
construction, and operation. Large plants make possible capital sav- 
ings and operating economies which cannot be obtained in smaller 
plants. The Johnsonville steam plant, though nearly three times as 
large in generating capacity as the Watts Bar plant (the first steam 
plant built by TV A), will employ less than one and a half times as 
many men. Furthermore, in the construction of large plants with large 
units it is economically feasible to use higher steam pressures and 
temperatures with more efficient use of the heat in the fuel burned. 
At the Watts Bar plant about 0.92 pound of coal is required to produce 
a kilowatt-hour of electricity; at Johnsonville this figure is 0.84 
pound, or about 10 per cent less. 

By 1956 TVA's large steam plants will require 18,000,000 to 
20,000,000 tons of coal a year. By the use of a few very large steam 
plants, huge bulk purchases of coal are possible for each plant. This 
will permit steadier mine operation and will justify mechanized operat- 
ing methods and reduce transportation rates, thereby lowering the cost 
of coal. The construction of a small number of large plants also 
makes it possible to concentrate the capacity at the very best locations, 
where the plants may be built and operated most economically. 

It is clear then, that TVA's combination of hydro and steam plants, 
with increasing emphasis on the latter, rests upon economic consider- 
ations. Further, it is clear that the policy of expansion of generating 
facilities stems directly from the Act of 1933, particularly from those 
provisions which charge TVA with responsibility for supplying the 
power needs of the region, and for selling electricity to the greatest 
possible number of preferred consumers at the lowest practicable 

Some Financial Aspects of Power Operations 

In assessing the financial results of TVA's power oper- 
ations, it is well to remember that section 14 of the TVA Act requires 
the Authority to follow the uniform system of accounts established by 
the Federal Power Commission. The purpose of this provision is to 
ensure the accumulation of comparable data useful to the Congress 

The Power Program 129 

in formulating legislative policies, and useful to the FPC, to state 
regulatory agencies, and to the public. In order that this objective can 
be fully accomplished, the distributors of TVA power have agreed 
that they, too, will follow the FPC system of accounting. Thus the 
records that relate to the generation and sale of TVA electricity are 
the same as those used by the electric utility industry generally. 
That the TVA has been successful in adapting its transactions to the 
requirements of FPC accounting methods is attested by the uniform ap- 
proval of its system of financial records by persons of professional 
competence who have reviewed them. The figures to be examined 
here are taken from those records. 

Financial Results for the TVA 

An abbreviated statement of income to the TVA from 
its power operations is found in the accompanying table, which pre- 



Summary Statement of 

Income to the 


from its Power Program 

Fiscal Tear 

From 1933 


through 1952 




$ 95.0 



Operation and Maintenance 

5 2 -4 


Tax Equivalent 





$ 69.2 

1 18.2 

Total Expense 


Net Income before Interest 

$ 25.8 


Average Investment Assignable 

to Power 



Annual Return on Investment 



sents both a 19-year summary and a summary for 1952. During the 
fiscal year 1952 power revenues totaled $95,000,000. Operating and 
maintenance expenses were $52,400,000, taxes were $3,000,000, and 
depreciation was $13,800,000. Net income before interest therefore 
was $25,800,000. For the nineteen years from 1933 through 1952, 

130 Twenty Years of TVA 

power revenues totaled $590,900,000. Operating and maintenance ex- 
penses totaled $230,400,000, payments in lieu of taxes were $26,300,- 
000, and depreciation was $118,200,000. Net income before interest for 
the nineteen-year period was $216,000,000. 

The important question, of course, concerns the adequacy of earn- 
ings. The raw figures of dollar earnings are not without interest, but 
the basic issue is whether the rates at which TVA sells power produce 
enough revenue to cover all costs. The table reveals that the rate of 
return for 1952 was 4.7 per cent, and that for nineteen years the 
return has averaged 4.3 per cent per year. The rate of return will 
vary from year to year, depending on such things as level of business 
activity and amount of rainfall. The difference between a dry year 
and a wet year can mean a difference of several million dollars in 
earnings. In the dry year of 1942, for example, the return was two 
per cent, while in the wet year of 1950 it was 5.8 per cent. The point 
to remember, however, is that over a period of years earnings have 
averaged more than four per cent. 

The figures on which these computations rest take into account 
all operating and maintenance expenses that can reasonably be 
charged to the power program, including substantial payments to 
state and local governments in lieu of taxes. Depreciation is charged 
on a straight-line basis in amounts that will recover from the con- 
sumer the full cost of depreciable properties during the life of these 
properties. During the nineteen years covered by the table the govern- 
ment borrowed money at rates which averaged two per cent. The re- 
turn which TVA has earned more than doubles this rate. TVA's earn- 
ing rate would appear, therefore, to be fair to the government; it is 
neither unduly high, considering the favorable business conditions 
of the past dozen years, nor unduly low in light of the primary ob- 
jectives of low rates and widespread use. 

In considering the question of adequacy of TVA's earnings, it is 
important to bear in mind that Congress, in creating the agency, did 
not intend that it should provide a source of revenue to the federal 
treasury. TVA was given the primary job of assisting in the develop- 
ment of a region, and power was regarded as a tool to be used in 
furthering that goal. The Act of 1933 states a Congressional intent 
that power operations be "self-supporting" and "self-liquidating"; be- 
yond that TVA was to make the power widely available at the lowest 
practicable rates. Since TVA was never intended to make a large profit, 
the rates at which power is sold were not fixed to produce such a 
profit. They were designed, in accordance with the express instruc- 
tions of the Congress, to cover all the costs of TVA's power program, 

The Power Program 131 

including liquidation of the government's investment in that program. 
That the power program pays its way, within the terms of established 
policy, is abundantly clear from the record. 

Financial Results for the Distributors 

The following tabulation affords a summary of the 
1952 income to local distributors from the sale of TVA power: 

Table 4 

Summary Statement of Income to the 

Fiscal Tear 



Total Power Revenue 



Power Purchased from TVA 


Operation and Maintenance 





12. 1 


$ 82.4 

Net Income before Interest 

$ 21. 1 



Net Income 


Average Investment (Depreciated) 


Return on Investment 


The municipalities and co-operatives received $103,500,000 in revenue. 
Their largest operating expense was the cost of power purchased from 
TVA, which amounted to $41,600,000. The average price paid by the 
distributors for wholesale power was 4.26 mills per kilowatt-hour. 
The remaining expenses are very similar to those of a privately owned 
utility because TVA's distributors operate the same kinds of distri- 
bution facilities and perform generally the same service for their cus- 
tomers. Among these expenses are those of operating and maintaining 
the distribution system, reading consumers' meters, preparing the bills 
and collecting the money, sales promotion activities, and general ad- 

As has been noted, all of the municipal systems and most of the 
co-operatives pay taxes or tax equivalents. Among the municipal 
systems, the common practice is to apply the total of the state, county, 

132 Twenty Years of TVA 

and municipal property tax rates to one hundred per cent of the de- 
preciated book value of the power properties. Such systems pay at 
least as much in property taxes as would be paid if their properties 
were privately owned. In some states the co-operatives are exempt 
from taxes by state law; in others they pay property taxes based on 
assessed valuation, which is normally quite a bit less than the book 
cost of the properties. This practice, of course, applies to co-operatives 
that buy power at wholesale from utility companies as well as to 
those served by TVA. 

The distributors have two principal sources of new capital, rein- 
vested earnings and borrowings. The municipal systems normally issue 
revenue bonds through the business channels through which other 
municipal bonds are issued. Their bonds are not general obligations 
of the city, but of the electric system alone. Interest rates are deter- 
mined by the market for such bonds. The co-operatives, on the other 
hand, borrow from the Rural Electrification Administration and pay 
interest at 2 per cent. This is a favorable rate which reflects the cost 
of money to the United States government. 

For all municipal and co-operative systems distributing TVA 
power, net income before interest totaled $21,100,000 in 1952. The 
depreciated plant investment averaged about $300,000,000; so the 148 
distributors earned a return of 7.0 per cent. The return to the munici- 
pal systems, whose operations are more profitable than those of the 
co-operatives, was somewhat more than 10 per cent. The average re- 
turn for all co-operatives was 2.6 per cent. The earnings of co-opera- 
tives undoubtedly will improve once they have had an opportunity 
to develop the use of electricity in their service areas. Up to now, the 
concentration of effort has been on the extension of lines into rural 
areas previously unserved. Henceforward the task will be to educate 
the rural consumer to the advantages of electricity in improved farm- 
ing practices and better living. 

Some Controversial Issues 

The "TVA is subsidized" theme rests upon four major 
charges: (1) TVA has allocated too high a percentage of its invest- 
ment to navigation and flood control; (2) TVA does not pay taxes; 

(3) TVA does not pay interest on the government's investment; and 

(4) the government will never recover its investment. Not all of these 
are aimed overtly at the power program, but all ultimately come to 
rest there; for whatever the nominal occasion for a particular attack, 
the power program is likely to prove the real target. 

The Power Program 133 

Because navigation and flood control do not produce financial in- 
come, their benefits are estimated in other terms. Power, however, re- 
turns income in dollars, and this immediately directs attention to 
revenue and costs. In order to determine the cost of power, the cost 
of both navigation and flood control — senior partners in the three- 
way program — must also be determined. Allocation of investment is 
nothing more nor less than a form of cost accounting by which the in- 
vestment in the total TVA plant is divided among the three principal 
programs, namely, navigation, flood control, and power. 

In arriving at an allocation of investment, TVA might have pro- 
ceeded along any of several lines. One method seeks to determine the 
benefits deriving from navigation, flood control, and power, allocating 
investment in the proportion suggested by the division of benefits. 
TVA, however, adopted what is called the alternative justifiable ex- 
penditure principle, which rests essentially on determination of the 
cost of constructing the facilities for each program separately, and on 
employment of the resulting proportion in the allocation of invest- 
ment. TVA accountants and engineers labored long and arduously on 
this problem, and their conclusions were examined with care by a 
board of outside consultants. The resulting allocation earmarked 64 
per cent of the total investment for power, 19.3 per cent for flood 
control, and 16.7 per cent for navigation. 

Clearly the allocation arrived at is open to attack, as any other 
would have been. Some indeed insist that the electric consumer should 
bear the entire cost of the TVA system, disregarding the fact that this 
is not the practice in other parts of the country — that in Ohio and 
Pennsylvania, for example, the rates charged by the power companies 
are not required to reflect the government's investment in navigation 
locks or flood control projects in the Ohio and the Monongahela 
River basins. TVA's stand on this question is firm and clear: first, 
the allocation of investment among the three major programs is not 
only desirable but necessary; second, the allocation arrived at, though 
not the only possible one, is technically sound. Some years ago the 
Federal Power Commission, at the request of a Congressional sub- 
committee, reviewed the methods employed in arriving at the alloca- 
tion and found them reasonable. 

The argument that TVA does not pay taxes, like the attack on the 
method of investment allocation, is directed primarily at the power 
program. Power activities in the Valley are of two kinds: the whole- 
sale operations of TVA and the retail operations of the distributors. 
Section 13 of the Act of 1933 (as amended) requires the TVA to 
make annual payments in lieu of taxes to the states and counties 

134 Twenty Years of TVA 

equal to 5 per cent of its total power revenues, excepting only sales 
to federal agencies such as the Atomic Energy Commission. Such pay- 
ments, the act stipulates, shall be in an amount not less than the 
property taxes previously paid by private owners on properties used 
by TVA in its power business. As noted earlier, section 10 of the 
TVA power contract permits tax-equivalent payments to cities by 
municipal distributors under a formula which almost uniformly pro- 
duces more revenue for the city than it would receive from a straight 
tax payment by a privately owned concern. Thus both the wholesale 
and the retail ends of the power business are covered by systems of 
payments in lieu of taxes which are designed to offset the loss of 
revenue occasioned by the removal of power properties from the state 
and local tax rolls. 

The essential purpose of the in-lieu payment system has been 
achieved, and more. In 1952, TVA paid somewhat more than 
$3,000,000 in tax equivalents, the local distributors nearly $4,700,000, 
for a total of about $7,700,000. This was well over twice as much as the 
former state and local property taxes paid on all properties purchased 
by TVA and the distributors for use in the power business. It amounted 
to 6.5 cents out of every dollar of the gross revenue from the power 
sold to the municipal and co-operative systems. By way of comparison, 
the state and local taxes paid by the 13 large privately owned utilities 
serving the area adjacent to TVA ranged from 5 to 11 per cent in 
1951, with the average at 7.8 per cent. The TVA-distributor in-lieu 
payments therefore are in line with the tax payments of the private 
companies; not only are the electricity rates, wholesale and retail, 
high enough to cover taxes, but the taxes (or their equivalent) are 
being paid. 

The only major tax that is not paid by TVA or the distributors is 
the federal income tax. Municipalities and rural electric co-operatives 
are exempt everywhere in the country, as a matter of national policy. 
The municipalities and co-operatives in the TVA area therefore derive 
no special benefit because they buy TVA power. It is significant, how- 
ever, that the ten per cent return on investment earned by the munic- 
ipal distributors — whose service areas compare most closely with those 
of privately owned utilities — is as great as the return earned by such 
utilities before income taxes. Thus the earnings of the public distribu- 
tion systems are sufficient to pay the federal income tax were such 
payments required; hence, the explanation of their low rates must be 
elsewhere than in their exemption from that tax. 

Since all of TVA's income belongs to the government, it would be 
surprising if it should be required to pay the federal income tax. At 

The Power Program 135 

the same time, if a share of its earnings were earmarked for the in- 
come tax in the same proportion as for utility companies, there would 
still be enough left over to provide a creditable return. From 1937 
through 1951 — the period for which data are available — private utili- 
ties paid income and excess profits taxes equal to about one-fourth of 
what they earned. If TVA since the beginning of operations had 
paid one-fourth of its net income, it would have paid about $54,000,000. 
The remaining $162,000,000 would have represented a return on in- 
vestment of 3.25 per cent. In 1951 the private utilities paid as income 
taxes about 35 per cent of what they earned. If TVA had paid 35 
per cent of its net income of $25,800,000 for 1952, it would have paid 
$9,000,000, and the remaining $16,800,000 would have represented a 
return of 3.0 per cent. It is apparent that TVA's wholesale rate pro- 
vides revenues sufficient to cover income taxes comparable to those 
paid by the utility industry, with enough left over to compensate the 
government adequately for the use of its money. 

Actually, the answer to the income tax question is not to be found 
in arithmetic, but in national policy. TVA's power program was not 
established by Congress as a source of revenue for the federal govern- 
ment. On the contrary, as has been pointed out elsewhere, Congress 
instructed TVA to charge the lowest possible rates consistent with 
making the power program self-supporting and self-liquidating. Fur- 
thermore, TVA was directed to limit its operations to the wholesale 
end of the power business, which is far less lucrative than the retail 
end. The essential differences between TVA and the private utilities 
are in their objectives, not in the arithmetic surrounding their ac- 

The argument that TVA's power rates are low because the agency 
does not pay interest is fallacious on two counts. First, TVA does 
pay some interest. At one time the TVA Act included a general au- 
thorization for TVA to issue bonds in order to secure additional 
capital. In 1939, Congress amended the Act to authorize TVA to issue 
bonds for the specific and sole purpose of acquiring certain utility 
company properties. Altogether, TVA has issued $65,000,000 in bonds 
to the RFC and the United States Treasury, of which $26,000,000 
were retired through June 1952. TVA pays interest on these bonds 
and records this interest in its accounts. With respect to funds pro- 
vided by appropriations or from reinvested earnings TVA does not 
pay interest as such, nor does it record any hypothetical interest on its 
books. Second, the financial success of a business enterprise is not 
measured by the size of its debt nor by the amount of interest it pays 
on that debt. It is measured rather by what the owner of the enter- 

136 Twenty Years of TVA 

prise earns on his investment. In the case of TVA, this is the 4 to 5 
per cent rate of return of which note has been made. This return 
exceeds by a generous margin any interest that might be imputed to 

On the question whether the government will recover its power 
investment in the TVA, the record is explicit and to the point. Section 
26 of the Act of 1933 authorized the TVA Board of Directors to use 
power revenues to operate the power system and to retain whatever 
earnings might prove necessary to build new power facilities. Surplus 
earnings were to be paid into the United States Treasury. The ap- 
propriations act for 1948 had the effect of modifying this provision. 
In this act Congress provided that the then existing investment of 
Treasury funds in TVA power facilities should be repaid within forty 
years after those facilities were placed in service. TVA, in fact, is well 
ahead of the schedule of payments called for in the 1948 act. Through 
June 30, 1952, it has paid $66,000,000 into the Treasury, $26,000,000 
for the retirement of bonds (as above noted), and $40,000,000 for 
the general fund. For those who like to assess the TVA in the light 
of business practice, it may be pointed out that the plan for repay- 
ment of investment sets TVA apart as an electric power enterprise; 
for privately owned utilities do not, as a rule, repay their investment. 
A few retire their bonded debts, though most prefer simply to re- 
fund; but no utility pays off its stockholders, ending up one day 
with no one claiming an investment in the business. Dividends may 
exceed the stockholder's investment, but these dividends are con- 
sidered a return on investment, not a repayment 0/ investment. 

In summary, three conclusions seem warranted from an examina- 
tion of some of the major controversies surrounding the TVA. First, 
the most insistent criticisms are directed at the power program, al- 
though public power is not always the nominal target. Second, the 
critics almost uniformly emphasize issues involving policy determina- 
tions made at a higher level than TVA. The proper object of the 
wrath of the utility companies is not the TVA, which is only the 
agent, but the Congress, which as principal made the basic decision 
which put TVA in the power business. Third, where the criticisms 
concern administrative action rather than policy, they turn out on 
analysis to be largely without merit. The TVA's power program 
could, and indeed does, profit from constructive criticism; but the 
issues which swirl about it in public discussion are largely artificial or 

Chapter 9 

Reservoir Land Management 

By Claude W. Nash 

In carrying out its various programs, the Tennessee 
Valley Authority has bought over 1,150,000 acres of land in 22 major 
reservoirs, and land or land rights for over 9,000 miles of transmis- 
sion lines. More recently, it has entered upon an extensive program 
of selling land which it no longer needs. Responsibility for purchase 
and sale of land rests with the Division of Property and Supply. Re- 
sponsibility for review to determine continuing need for land man- 
agement and for family and institutional relocation in the case of new 
reservoirs rests on the Division of Reservoir Properties. These opera- 
tions form an illuminating chapter in TVA history. 

Reservoir Land Purchase 

At first glance one might assume that since TVA is a 
federal agency, armed with the right of eminent domain, land buying 
would be a fairly routine matter. In fact, this has not been the case. 
As a regional agency TVA's responsibility goes on long after the dams 
and transmission lines are built. The wise development of the re- 
sources of the Valley is both a long-continuing responsibility and one 
that can be met only through co-operation with the people of the 
Valley. The purchase of their farms has been the first contact of thou- 
sands of farmers in the Valley with TVA. Undoubtedly the first im- 
pressions gained by these farmers of TVA's fairness and trustworthi- 
ness have conditioned their attitudes toward the whole resource 
development program. A seriously dissatisfied property owner could 
hardly be expected to participate wholeheartedly in the many phases 
of that program. TVA's land acquisition policies therefore have been 
of great significance to the entire program. Thus, one guiding prin- 
ciple in land acquisition has been to try to leave the area of a reser- 
voir and its people at least as well off as they were before the reservoir 


138 Twenty Years of TVA 

was built. The other guiding principle has been, of course, to seek to 
obtain needed land at a cost which is fair to the government. 

In Norris, the first reservoir built by TVA, the policy was to buy 
a great deal of land beyond that needed for flooding and flowage 
rights. Altogether about 120,000 acres above the water line were ac- 
quired. This policy was arrived at after vigorous discussion among 
TVA staff. On Norris the foresters, recreationists, engineers, and pub- 
lic health people advanced program reasons for a large purchase pro- 
gram and only the agriculturists were opposed. It was thought that 
afforestation of the rough and hilly terrain in the immediate vicinity 
of the shorelines would best protect the watershed from erosion and 
the reservoir from rapid siltation, as well as contribute to recreational 
use of the reservoir. There was the argument also that so-called sub- 
marginal and poor lands ought to be taken out of use. Concern about 
breeding of malaria-carrying mosquitoes along reservoir shorelines 
was in the minds of the public health staff. The agriculturists on the 
other hand argued that heavy overpurchase would eliminate large 
numbers of farms, primarily of the family subsistence type, and would 
adversely affect the economy of the region. 

Thus on Norris reservoir the heavy purchase argument won out; 
but this policy soon began to be modified, as accumulated experience 
began to show that erosion and siltation were not the immediate prob- 
lems to the reservoirs that had been feared, as economic conditions 
improved and reservoir sites were chosen in heavier populated areas, 
and as new techniques for combating malaria were developed. By the 
time of the extensive purchase for the Kentucky reservoir, beginning 
in 1939, easements were being acquired instead of fee simple purchase. 
The Watts Bar purchase policy (1940) called for a "reasonable" pro- 
tection strip. A major policy change came with the Fort Lou doun 
reservoir purchase in 1942 . There the Board decided that, instead o f 
buying a continuous strip, only ca refully selected public acce s s point s 
would be purchased for use of the general public in getting to th e 
lake. In the reservoirs constructed in the Upper Holston area since 
World War II a minimum of land above the maximum water line has 
been purchased, and flowage easements have been used extensively. 
For example, in Boone reservoir, which is located in a densely popu- 
lated area with good farm land and considerable industrial develop- 
ment, TVA purchased only 833 acres of land above the maximum 
water line. Although Boone is one of the smaller reservoirs, this 
amount of land represents a tremendous decrease in overpurchase. 

In deciding how much land to buy in any reservoir project, TVA 
starts from the fact that it must buy all that will be permanently cov- 

Reservoir Land Management 139 

ered by water . Then it will need fee title or flowage rights on the land 
that may be covered intermittently from at least once a year up to 
once in fifty years. Gene rally speaking, when the effect of the reser - 
voir on a farm will be minor and the farm will continue to be an 
economic un it after the reservoir is filled, the policy since befor e 
World War II has been to purchase a flowage easemen t. This leaves 
the farmer in possession down to the water's edge, subject to all the 
rights TVA needs and has bought. This policy disrupts production 
and community life least. On the other hand, where the bulk of a 
farmer's land is to be covered, or (as is frequently the case) where the 
best land will be lost to him leaving him with an uneconomic rem- 
nant, TVA usually buys the entire farm in fee simple. This avoidance 
of "uneconomic severances" in a large reservoir usually means that 
many hundreds of acres above the water line come into TVA's pos- 

Access is another factor in overpurchase. TVA replaces state and 
county roads flooded out by reservoirs. It frequently occurs that the 
head of a valley or a long peninsula, containing only a few families, 
has its road access up the valley cut off. Whenever the cost of replac- 
ing a road serving only a few families is substantially more than the 
cost of purchasing the land, TVA will purchase the land. Such roads 
are usually county roads, and the county officials are in accord with 
this policy because it saves them heavy maintenance on little-used 

Some land above the water line in each reservoir is needed to pro- 
vide access and protection to the property and for other program uses 
such as malaria control zones, shoreline erosion protection, and pub- 
lic access. The amount of these purchases is small in proportion to 
the total acreages, and has declined as TVA has gained experience as 
to actual needs, and as conditions have changed. 

TVA's statutory authority makes possible the expeditious purchase 
of land. None of the papers need to go through Washington. When 
TVA has determined to purchase a piece of land, it can and does 
make payment as soon as the deal is closed. Since the owner knows 
he has to relocate in most instances, early payment makes him more 
willing to sell voluntarily. This not only makes it easier for TVA to 
buy, but also helps the farmer to make a suitable relocation. 

In dealing with landowners, the policy is that of "no price trad- 
ing." The land is appraised as carefully as skilled and experienced 
appraisers can do the job. The appraiser in each case makes every ef- 
fort to have the farmer go over the premises with him so that no ele- 
ment of value will be missed. The resulting appraisal is reviewed 

140 Twenty Years of TV A 

by the appraiser's supervisor; hence no appraisal is ever a single in- 
dividual's judgment. Having determined a price, TVA will not bar- 
gain. Owners would differ widely in their bargaining ability and in 
their economic strength. The policy, therefore, represents an effort to 
assure equal treatment to all insofar as possible. 

Since owners seldom want to sell, the sale being for the govern- 
ment's convenience, and since they must relocate in an area of accel- 
erated demand, appraisals are liberal. Usually also, the farmer is per- 
mitted to retain salvage rights in his improvements and is allowed to 
remain in possession and grow crops on the land until the "general 
possession date" near the time for completion of the project. This 
date normally coincides with the closure of the gates of the dam and 
the beginning of impoundment of water. 

When an owner is unwilling to accept TVA's price after extended 
discussion, the land goes to condemnation. The TVA Act sets up a 
procedure for condemnation through federal courts. The federal judge 
utilizes commissioners to take evidence and view the property. TVA 
deposits funds to the amount of the appraised price with the court, 
and the judge may at his discretion permit the owner to withdraw 
up to 90 per cent of this amount pending decision of the case. This 
enables the owner to go ahead with his relocation before he has his 
day in court. Over all the years and projects only about 61/2 per cent 
of the land purchased has gone through condemnation for reasons of 
price disagreement. 

The primary concerns in the land purchase program through the 
years have been gaining and holding public confidence; meeting con- 
struction deadlines; keeping prices fair to both government and 
owner; and safeguarding the integrity of staff to prevent any suspicion 
of fraud. 

The total cost of the 1,155,000 acres of land purchased in all reser- 
voirs since 1933 is about $82,000,000, or an average of about $71 per 
acre. Public acceptance of the program has been general; for while a 
few criticisms are heard in each reservoir, most people seem to think 
the program has worked well. Other public bodies apparently think 
so too, for TVA has been asked to advise several agencies on their 
land purchase programs. 

Review To Determine Continuing Need 

Purchase of land above the maximum water line of its 
reservoirs does not necessarily mean that TVA will always own it. 
TVA's policy is in contrast with the general practice of permanent 

Reservoir Land Management 141 

ownership and management of some other federal agencies, as for ex- 
ample, the United States Forest Service or the National Park Service. 
It is true that the land covered by water at any time cannot be sold 
and that the land in the immediate vicinity of dams forming the dam 
reservations is retained permanently. At the same time, the act pro- 
vides that land no longer needed by TVA shall be sold at public auc- 
tion to the highest bidder. Through the early years, while the resource 
development programs were in their formative stages, very little land 
was disposed of. Following a careful study of the lands in Kentucky 
reservoir in 1945, however, a policy was adopted calling for review of 
all land holdings. The goal set was ultimate retention only of lands 
covered all or some of the time by water, plus such additional lands 
as would be needed to serve definitely authorized programs of TVA 
or other public agencies. 

To this end TVA began detailed reviews of its lands, reservoir by 
reservoir. The first review was in Wheeler reservoir, in North Ala- 
bama. A tract-by-tract study of TVA land was made by each division 
of TVA having any program interest in land. The lands needed per- 
manently or for an interim period were placed in the retention cate- 
gory, and those for which no further need was found were labeled 
surplus. These formal findings, together with the reasons therefor and 
the over-all summaries and conclusions, make up what is called a 
Reservoir Land Review. Upon approval by the TVA Board of Direc- 
tors the lands labeled surplus become available for sale. 

In the earlier reviews, the land needs of some TVA programs 
which were in developmental stages could not be accurately estimated. 
Where such open questions remained as to specific tracts they were 
retained in interim status. With further experience, such uncertain- 
ties gradually were resolved. By 1950, therefore, the time was ripe for 
re-review in some reservoirs. The re-review on Norris reservoir, for 
example, was completed in 1952 and 15,000 acres previously retained 
were declared surplus. Since this review, 4,400 acres retained for pro- 
gram purposes have been placed in the hands of the State of Tennes- 
see and local agencies, which will carry out these programs. When all 
lands now surplus in that reservoir are sold, and when remaining 
lands found suitable are transferred to other public agencies in fur- 
therance of TVA program objectives, the agency will have reached its 
goal of retaining only flowage and nontransferable program lands. 
Thus the oldest reservoir quite logically will be the first to reach a 
permanent public land pattern. 

The land marked for retention in a particular reservoir land re- 
view is recorded on what is called a forecast map. Every tract to be 

142 Twenty Years of TVA 

retained is so recorded in color for quick recognition as to type of use. 
The Division of Reservoir Properties, having the responsibility for 
management of reservoir lands, keeps in touch with the divisions using 
these lands. When a division no longer needs a given tract of land, it 
so reports and inquiry is made whether any other TVA division needs 
it. If not, it is certified to the Land Branch as surplus, and, after con- 
sultation with other federal agencies and with state and local agen- 
cies with possible interests, is made available by that branch for pub- 
lic sale. 

Lands retained for recreation program use are intended primarily 
for ultimate transfer to other federal, state, and local agencies, and 
for lease with eventual sale possible to quasi-public agencies having 
youth training and other recreation objectives. TVA maintains a cer- 
tain interest in these lands to assure their use for the purposes for 
which they are transferred, leased, or sold. 

Several mountain reservoirs in east Tennessee and western North 
Carolina are located within the boundaries of national forests. Where 
lands which have come into TVA possession are most suitable for in- 
clusion in a national forest, custody is transferred. TVA and the U. S. 
Forest Service are in the final stages of a transfer of about 4,000 acres, 
representing practically all of the Watauga shoreline in TVA posses- 
sion, to the Forest Service. Transfer of this rugged mountain land will 
bring the National Forest down to the shoreline along much of this 
Swiss-like mountain lake, and will preserve it permanently in a nat- 
ural mountain setting. 

The National Park Service was brought into the forecasting stud- 
ies for Fontana reservoir. A rugged and almost inaccessible mountain 
area lay between Fontana Lake and the Great Smoky Mountains Na- 
tional Park. For TVA to build roads into it would have cost more 
than the cost of the land. After careful studies participated in by the 
Park Service, the North Carolina Planning Commission, Swain 
County, and TVA, it was decided that TVA would buy the inacces- 
sible land and transfer it to the Park, and that the Park Service would 
then provide the roads as a part of its park road system. 

City and county planning commissions, where their interests and 
TVA's are common, frequently contribute to TVA's forecasting of 
land use. With the city planning commissions of the main river cities, 
TVA has common interests involving navigation, harbors, river termi- 
nals, and the industrial use of waterfront lands belonging to TVA. 
The Tennessee State Planning Commission, as an illustration, has 
been brought into TVA's forecast planning almost constantly on all 
of the Tennessee lakes. 

Reservoir Land Management 143 

The forecast maps show a variety of TVA program uses of lands 
along the reservoir shorelines. The heaviest use, as one would expect, 
is for recreation. In the southern portions of the Valley, where ma- 
laria has long been prevalent, it was found necessary in some in- 
stances to purchase and hold malaria control zones to prevent people 
from living in low-lying areas of heavy infection. Other program uses 
of reservoir land include sites for navigation aids and safety harbors, 
and future steam plant sites for TVA. 

It frequently develops that a forecast program use of TVA land 
does not begin immediately, or does not cover all possible uses of the 
property. TVA seeks multiple use for its lands where practicable; fur- 
ther, it tries to make use of its agricultural and timber resources on 
an interim basis. TVA buys no land for agricultural purposes, but 
when it has land, held for another purpose, which can be grazed or 
cropped without interfering with the primary use, it seeks to make 
the land available for such use. In 1952, TVA licensed about 50,000 
acres of farm land, largely for grazing purposes. Farmers are encour- 
aged to use soil improvement practices in farming TVA lands. In this 
connection TVA has started the practice of licensing farm land for 
periods up to five years, where the primary use permits this. This fur- 
ther encourages sound agricultural practices. In 1952, TVA also sold 
from forested land 3,673,000 board feet of lumber. All timber har- 
vested from TVA land is carefully marked by TVA forestry techni- 
cians with a view to stand improvement and sustained yield. Recrea- 
tion and scenic areas especially are marked for a light cut. 

Surplus Land Sale 

The final step in the cycle of TVA land management 
consists of sale of land found by review to be surplus. A general pro- 
vision covering the sale of TVA land is found in section 3 1 of the act, 
which provides that land not actually needed for TVA programs shall 
be sold at public auction to the highest bidder after due advertise- 
ment. In planning its sales the Land Branch proceeds much as any 
prudent landowner would. It gears sales offers to market conditions. 
It subdivides the sales tracts in accordance with the best indicated use, 
taking into account all factors of location, access, and the economy 
and development of the surrounding area. Tracts are sold as home 
sites, private recreation sites, agricultural lands, commercial recrea- 
tion sites, and industrial sites. Access is provided if and as appropri- 
ate. Tracts are carefully appraised and a minimum sale or "upset" 
price is fixed. Sales are fully advertised both through correspondence 

144 Twenty Years of TVA 

with people who have evidenced an interest and through newspaper 

Nearly all land is sold in this manner. There is, however, an ex- 
ception which should be mentioned. Under section 4 (k) of the act, 
land can be sold for recreation by negotiation, provided it is to be 
used permanently for this purpose. TVA is now nearing the end of a 
program of selling most of its remaining leased boat docks to the les- 
sees under this provision. Private cabin sites which have been leased 
from TVA since about 1940 are now being sold to the lessees largely 
under this provision. 

Through fiscal year 1952 TVA had sold about 110,000 acres of land 
for $8,000,000. As a result of an accelerated review program, however, 
more and more land is becoming surplus, and land sales can be ex- 
pected to increase during the next several years. 

Family Relocation 

When TVA decides to build a dam and reservoir, most 
of the people whose property is being purchased come face to face 
with the problem of having to move. This is a serious problem, par- 
ticularly to a population as stable as is found in many pocketed val- 
leys in east Tennessee and western North Carolina. There are homes 
in Polk, Anderson, and Carter counties in Tennessee; in Graham and 
Swain counties, North Carolina; and in Fannin County, Georgia, 
where the same squirrel rifle has hung over the same mantelpiece 
since before the Revolution. These people are fiercely individual and 
very proud. They have a strong allegiance to their government, but 
they do not like to be pushed around. Furthermore, TVA from the 
beginning has had more than a passing interest in their good will and 
co-operation. In addition, therefore, to the objective of clearing the 
reservoir by the time the dam is to be finished, TVA wants the people 
who have to move to be at least as well off as before and to be will- 
ing to continue to co-operate in the agency's programs. 

TVA has had contracts for many years with the agricultural exten- 
sion services of the seven state colleges of agriculture in the Valley. 
Assistance in family relocation is one of the provisions in the con- 
tracts. Under this provision the Extension Service, operating through 
the office of the county agent in each county, places an assistant 
county agent (a man) and a home demonstration worker (a woman) 
in each county affected by a reservoir. These workers, throughout the 
period of construction of the dam and until the reservoir is filled, 
devote full time to the problems of the families to be moved. Under 

Reservoir Land Management 145 

this arrangement the people in the reservoir area are dealing with an 
agency they know and usually with people with whom they already 
have an acquaintance. A valuable by-product of this arrangement is 
that where the families have not been previously acquainted with the 
county agent's office, they do become acquainted and establish a rela- 
tionship that usually carries over into a permanent contact. 

TVA, for its part, has only a minimum relocation staff in each 
reservoir area, consisting usually of one relocation supervisor and his 
secretary. The supervisor's primary job is to maintain close liaison 
with the extension agents who are actually doing the field job. He 
keeps the extension workers up to date on TVA's plans, and they in 
turn keep the people informed. In the rare situation where it becomes 
necessary to resort to legal measures to get a family to move, it is the 
TVA representative who initiates the action. The Extension Service 
has no legal authority over the people; its relationship with them is 
co-operative and voluntary at all points. 

When a farm has been purchased, the family gets paid immedi- 
ately. As soon as the farmer receives his check, TVA notifies the fam- 
ily by letter that the services of the county agent's office are available 
free of charge. The family usually makes an early contact with the 
county agent. Where this does not occur, one of the relocation agents 
makes contact with the family and offers his services. These services 
are not pressed upon the family. In many instances the farmer feels 
that he is fully capable of taking care of himself, of making his own 
plans and carrying them out. The amount of assistance rendered var- 
ies widely. 

When a family does indicate that it wants help, the first step taken 
by the relocation agent is to get detailed information. He needs to 
know whether the family has children, how many, and of what age, 
since relocation with respect to schools naturally is a primary consid- 
eration. He needs to know the size of the farm and the type of farm 
operation, whether dairying, tobacco growing, grazing, or general 
farming. The agent is interested further in knowing whether the 
farmer wants to continue his present type of farm operation or wants 
to make a change. The home demonstration worker at the same time 
talks with the farm wife. She may find that the wife desires to make 
a number of changes as the result of being able to move; she may 
want a better planned home and some electrical equipment, for ex- 

The agent is interested also in the church, lodge, and club affilia- 
tions of the family. These connections have a bearing on the type of 
community into which the family would be interested in moving. An- 

146 Twenty Years of TVA 

other important factor is the employment of one or more members of 
the family in industry. In the Boone Dam area, to illustrate, over half 
of the families had some member working in an industry in Kingsport, 
Bristol, or Johnson City, all of which are within twenty miles of Boone 
reservoir. This placed a very definite limitation upon the kind of re- 
location that could be made. 

When the agent has collected the necessary facts he consults the 
files in the county agent's office concerning farms for sale throughout 
the general area. The agent screens the cards for the general type of 
location that he thinks the family would want, selects possibly half a 
dozen cards, and goes back and sits down with the family again. He 
goes over these locations, tells where they are, in what type of commu- 
nity they are, what kind of land is involved in each case. Since most 
of the people do not want to move any great distance, it frequently 
occurs that they know what these places suggested by the agent are 
like. In any case they screen the places themselves and decide which 
ones they would like to visit. The agent then takes the farmer and fre- 
quently the wife to look at one or more places. The process of visiting, 
studying, and bargaining goes on sometimes at length. Neither TVA 
nor the agent takes any part in the bargaining except to advise the 
buyer as to values on request. Sometimes a farmer is taken to visit as 
many as a dozen places before he makes up his mind. 

After the family has selected its location and made its deal with 
the owner, it may have one, two, or in some instances three years yet 
to stay in its old location until the dam is finished. TVA's policy in 
general has been to permit salvage rights in the improvements, and 
the policy has always been to permit the owner to live on the land 
until the dam is completed, subject to such rights as TVA may need 
to exercise. The former owner is free to grow crops just as before. The 
relocation agent, however, keeps in touch with the family and advises 
it on its farm planning. This is particularly important in the final 
year, when the problem of what crops to grow to avoid loss assumes 
special significance. 

A whole set of problems arises in the last months in connection 
with utilities. For example, as a reservoir nears completion the tele- 
phone company comes in and begins to take out its poles. The power 
co-operatives or municipal power boards have to move their lines at 
the last minute. The old roads begin to be closed toward the end of 
a project as the new roads are completed. Bridges are under construc- 
tion; the old bridges have to be blown out, or if they are steel bridges, 
taken down and salvaged. In the last two or three months therefore 

Reservoir Land Management 147 

the problems are many. Keeping in touch with the families during 
that period is of great importance. 

Another problem of importance in the late period of reservoir prep- 
aration is that of "scotching" rumors. Around any project rumors 
constantly mushroom. If the engineers stop by the side of the road, 
set up a transit, and begin to drive stakes in a farmer's pasture, the 
rumor immediately gains credence that a new atomic plant (or some- 
thing almost as dramatic) is going to be built in the neighborhood. 
Up-to-date, candid, and correct information to the people is of very 
great importance, particularly in a situation where voluntary co-oper- 
ation is necessary to the success of a program. 

TVA must keep human considerations constantly in mind. In 
Chatuge Reservoir an elderly man, past 90 years of age, contracted 
pneumonia a few days before the family was to move and the dam was 
to close. His doctor and the TVA doctor consulted and decided that 
to move the old man in his condition would endanger his life. TVA 
therefore held up closing the dam for some twenty days until the pa- 
tient was sufficiently recovered to be moved in an ambulance. An in- 
teresting human aspect of that case was that when the old man be- 
came conscious of what was happening he was very much concerned 
about delaying the closure. He insisted that he be moved at the 
earliest possible moment because he did not wish to be guilty of "hold- 
ing up the government." 

The number of families which have been removed from the 22 
reservoirs which TVA has built or is building totals approximately 
15,000. These removals have always been effected in time to meet the 
schedule of dam closures, with the one exception noted. The over- 
whelming majority of the relocated families feel that they are at least 
as well off as before. 

Institutional Relocation 

When the people move from their homes in reservoir 
areas, their institutions usually move also. The most important insti- 
tutions in rural communities are schools and churches, but there are 
also camps, clubs, lodges, and so on. TVA works closely with the 
county superintendents of schools and the state departments of edu- 
cation with respect to school relocation. Due to the general availabil- 
ity of bus transportation, the relocation of roads and bridges in reser- 
voir areas is of crucial importance with respect to the location of 
school buildings. For most reservoirs the studies made by the state de- 

148 Twenty Years of TVA 

partments of education, the county superintendents, and the TVA 
have resulted in a considerable advance in consolidation of schools. In 
a number of instances several one- and two-room schools have been 
consolidated into one school of six to eight rooms. 

Sometimes church congregations are so scattered by family reloca- 
tions that the congregation as such goes out of existence and the mem- 
bers affiliate with other congregations in the areas to which they move. 
Most churches, however, particularly those which have been in exist- 
ence a long time, prefer to move as a unit. Usually they attempt to 
find a location above the water line as near the old site as possible, 
where they can rebuild their church and keep their congregation in- 
tact. The experience of the Louisville, Tennessee, Methodist Church 
is relevant, though hardly typical. The community of Louisville in 
Fort Loudoun Reservoir area was a flourishing Tennessee River port 
community before the Civil War. It had a fine old brick church, built 
in 1853. The time for removal came during World War II when ma- 
terials were very scarce. The members of the congregation and their 
progressive young minister came to TVA and requested assistance in 
securing clearance with the War Production Board to get materials 
to build a new church. TVA interceded with the War Production 
Board and also gave some assistance to the congregation and the ar- 
chitect in planning the new structure. The bricks from the old church 
were hand-made. They were carefully salvaged from the 22-inch-thick 
walls, cleaned, taken to the new site, and used to line the interior of 
the sanctuary. The people wanted these same bricks to be used, and 
the minister felt that hand-made bricks are much better for acoustical 
reasons than machine-made bricks. The pews were solid cherry. The 
women of the congregation scrubbed and cleaned the old pews, which 
were installed in the new church. The church was completed at its 
new location in the late fall of 1942 and is now one of the most at- 
tractive rural churches in the Valley. 

The only incorporated municipality which TVA has ever inun- 
dated was the town of Butler, located in Watauga reservoir in John- 
son County, Tennessee. This was a small town with a population of 
about 700, located in a broad, attractive valley. It was an old commu- 
nity, going back 150 years. The citizens, desiring to relocate as a unit, 
got in touch with the State Planning Commission of Tennessee, which 
agreed to co-operate with the local officials and the TVA in planning 
a new community. Several members of the community formed a non- 
profit corporation and purchased two farms on the shoreline, some 
two miles from the existing townsite. With the help of the State Plan- 
ning Commission and TVA a town plan was drawn up, streets were 

Reservoir Land Management 149 

laid out, and lots were surveyed. A public auction was held at which 
the people purchased lots from the corporation. TVA purchased the 
municipal water and sewer systems of the old town and the outstand- 
ing bonds were retired out of the proceeds. About 125 families from 
the town of Butler moved to the new location, and the village is now 
a going concern. It adopted the name of Carderview initially, but the 
name was changed back to Butler by an act of the Tennessee Legis- 
lature in 1953. 

Another related aspect of clearing a reservoir is grave removal. 
William Cullen Bryant observed that "All that tread the globe are 
but a handful to the tribes that sleep in its bosom." This is true of the 
old Valley communities, where there are hundreds of thousands of 
graves, many of them dating back to pre-Revolutionary times. Unfor- 
tunately, it was necessary for TVA to disturb a few of these old ceme- 
teries. In Norris reservoir over 5,000 graves had to be moved. These 
graves were for the most part in church and family burial plots. The 
policy is to relocate the graves at TVA expense at a place selected by 
the family of the deceased. This has always been done reverently with 
due consideration for the family affections and religious sentiments. 
Religious services are held at the time of a grave removal and reinter- 
ment if desired, although in recent years this has rarely been re- 
quested. In a new reservoir some members of families are usually pres- 
ent when removal begins. After they satisfy themselves that the job 
is being done properly, they usually go away and the work is com- 
pleted without further visitors. 

Special Problems 

Still another adjustment is necessitated by the influx of 
employees which takes place when a dam or a steam plant is built. 
Where larger towns or cities are located within a reasonable commut- 
ing distance, the problem of the influx of employees is usually not 
serious, but in remote and sparsely populated areas housing, commu- 
nity services, and facilities become overburdened. In such situations 
TVA finds it necessary to establish construction camps, with dormi- 
tories and eating facilities for individual workmen and family housing 
for key personnel. The first such camp built by TVA was at Norris. 
The largest camp was at Fontana, deep in the mountains of North 
Carolina. Camps are now being operated at Johnsonville, Shawnee, 
and Kingston steam plants. Family housing is being provided for some 
workers at Boone and Fort Patrick Henry dams, and at most of the 
new steam plant projects. 

150 Twenty Years of TVA 

Construction camps and family housing are planned by the Site 
Planning Section of the Division of Reservoir Properties. They are 
built for economy and serviceability and are comfortable but not elab- 
orate. The policy is to provide necessary services which cannot be 
found locally. Charges for quarters and food are fixed after a careful 
survey of prices for similar services and facilities in the surrounding 
area. The charges are normally designed to recover TVA's costs. 

Sometimes it becomes necessary to lend assistance in community 
services. Where schools, for example, became overcrowded TVA for- 
merly gave some financial help to local boards of education. That has 
now been taken care of by a Congressional enactment covering all fed- 
eral projects. Funds in aid are now made available through the Office 
of Education, and TVA therefore has no further responsibility in that 

Library services are considered essential in the construction camps. 
TVA contracts with the nearest suitable local library to do the job. 
Over the years this policy has resulted in a healthy expansion of book- 
mobile services, in many instances to remote mountain valleys. TVA 
maintains recreation rooms and provides reading material for its men. 

Although the amount of time and money spent by TVA on recrea- 
tional and library services has diminished through the years, these 
services have been provided at all major construction centers. The 
provision of library service is particularly significant — not only for the 
contribution which books and periodicals made to the recreational 
and educational needs of employees during the construction period, 
but perhaps more importantly in terms of the impact which the 
method of providing the service has had on the development of re- 
gional library service in the Valley. In accordance with TVA's general 
policy of co-operation with local agencies, library contracts were en- 
tered into with existing or specially created library bodies which, after 
three years of financial assistance from TVA, typically assumed re- 
sponsibility for the service on a multi-county or regional basis. Thus 
in Tennessee, for example, a new or greatly expanded service to Val- 
ley people came into being as a by-product of getting a short-term job 
done for employees. 

Around each completed dam there is a reservation. It is an area 
suitable in size to provide for the security of the dam itself, and also 
to provide an appropriate physical setting for the dam. The Site Plan- 
ning Section tries to plan the surroundings of a dam to be as harmoni- 
ous with the existing terrain as possible. On completion of their job, 
the construction forces clean up the site, cover the scars, and plant 

Reservoir Land Management 151 

the area in trees and shrubs. People have been heard to say that TVA 
dams are always set in the middle of parks. 

TVA maintains guard service at the dams, a uniformed organiza- 
tion known as the Public Safety Service, which is concerned in times 
of war or emergency primarily with the security of the property, since 
it is national defense property. In normal times the guards meet and 
escort visitors and answer questions concerning the property and the 
TVA program. 

Chapter 10 

Fertilizer-Munitions and 

By Leland G. Allbaugh * 

In at least three important respects, the agricultural 
programs are basic in the general TVA program. First, the existence of 
the government's nitrate plants at Muscle Shoals, constructed during 
World War I for the alternate peacetime-wartime production of fer- 
tilizers and munitions, was one of the principal reasons for the creation 
of TVA. The Act of 1933 specifically authorized TVA to operate the 
plants, and directed the new agency to launch not only a regional but 
a national program in fertilizer development. Second, the larger aim 
of TVA is the integrated development of the region's natural re- 
sources, among which the land is of course primary. The development 
of sound farming methods in the Valley is a basic consideration in the 
attainment of proper land use. And third, sound agricultural practice 
is antecedent to erosion control, which in turn is intimately related to 
such flood control problems as siltation and water runoff. The agri- 
cultural and fertilizer-munitions programs thus emerge as a basic seg- 
ment of TVA's total activities. They are, indeed, second in size only to 
the river control program. 

These programs may be analyzed to advantage from the points of 
emphasis of (1) fertilizer-munitions research and production, (2) fer- 
tilizer distribution and use, and (3) agricultural practice in the Val- 

Fertilizer-Munitions Research and Production 

The coincidental treatment of fertilizer and munitions 
may seem to some a forced bracketing of two unrelated or even mutu- 

1 Mr. Allbaugh was assisted in the preparation of this chapter by members of 
the staff of the Office of Chemical Engineering. 


Fertilizer-Munitions and Agriculture 153 

ally antagonistic products, but, from the point of view of the chemist, 
joint consideration of the two is entirely natural. Nitrogen com- 
pounds form the basis of nearly all military explosives, exclusive of 
nuclear explosives. After nitrogen is taken from the air and fixed as 
ammonia, it can be made into all sorts of explosives and other ma- 
terials of war, or it can be made into fertilizer. Phosphorus, too, has 
both fertilizer and munitions uses. Phosphorus burns spontaneously 
in air and produces a dense white smoke, properties which make it a 
valuable material for military uses; it is also a starting point for the 
production of phosphate fertilizers. The close technical bond between 
fertilizer and munitions lends common sense to the idea of using the 
same laboratories, plants, and people for work on both. When a muni- 
tions plant stands idle, advances in technology soon make it out of 
date. Then when it is needed, tax money is spent lavishly in the hurry 
to rebuild or replace it and to start operation with an inexperienced 
crew. The country gains from the use of that plant for fertilizer pro- 
duction when its output is not needed for munitions. In this way the 
plant is kept up to date, and both the plant and the people who run 
it are kept ready for an orderly shift to munitions production. TVA 
has plants that can make fertilizer one day and munitions the next. 
TVA's team of scientists — experienced in research on both fertilizer 
and munitions — is an asset to the country both in peace and in war. 
Further, the national problems to which the men and the plants are 
dedicated fit in logically with TVA's primary regional responsibilities. 

Fertilizer: Background of Need 

The government took a hand in soil fertility when it 
set up the Department of Agriculture and the land-grant colleges, but 
the fertilizer part of the program of land-saving and land-building was 
long neglected. The fertilizer business in the United States had its real 
beginning with imports of guano. Since guano contained various 
amounts of the three major plant foods — nitrogen, phosphorus, and 
potassium — it came to be known as a "complete" fertilizer. This "com- 
plete" idea caught on with the farmers and set a pattern for the bud- 
ding fertilizer business of an industry made up largely of fertilizer 
mixers. Most of these mixers were small companies without technical 
people. They simply put together the nitrogen, phosphate, and potash 
materials which they bought from manufacturers or importers. Fish 
scrap and other animal matter were added to the mixtures for their 
aromatic appeal as well as for their value as fertilizers. Large amounts 

154 Twenty Years of TVA 

of inert filler materials were used. There was little scientific planning 
in either procedure or results. 

The industry made little progress toward higher grades of fertilizer 
in the last half of the nineteenth century. In 1880 the total content of 
nitrogen, phosphoric acid, and potash in a typical mixed fertilizer was 
only 13.4 per cent; forty years later it was only 13.9 per cent. About 
the beginning of this century the manufacturers began to improve 
their processes and to turn out more concentrated basic ingredients 
from which mixed fertilizers were produced. The plant food content 
of mixed fertilizers could have turned upward sharply, but it did not. 
The average content even in 1937 was not quite 19 per cent. Several 
things hindered an upward trend in analysis and a downward trend 
in the net cost of plant food to the farmer. For one thing, too many 
farmers judged fertilizer by brand, smell, and cost per ton. A ton of 
high-analysis fertilizer naturally cost more than a ton of low-analysis 
fertilizer, but the farmer and the land get more plant food for a dollar 
in the high-analysis product. The fertilizer people and the United 
States Department of Agriculture knew this, and the extension agents 
preached the message constantly; the farmer remained unmoved. 
What was needed was a long-range program that would convince the 
farmer that he could get plant food on his land more economically by 
using high-analysis products. 

Industry did not undertake such a program. The small mixer 
found it easier to take a short-range view and give the farmer what 
he was in the habit of using. As the basic materials got richer in plant 
food, the mixer added more sand or other filler to keep the grade 
about where it had been. The price per ton of complete or mixed fer- 
tilizer, sand and all, stayed about the same. Within the industry chem- 
ists and chemical engineers could have improved existing processes 
and developed new ones that would have yielded much better and 
cheaper fertilizers, but the manufacturers shied away from the long- 
term investment in research that the problem demanded. The few big 
companies already had profitable processes. Research was limited to 
projects that promised an early profit. 

The United States Department of Agriculture pointed out the low 
fertility of soils in the Southeast over forty years ago and suggested 
that the federal government would have to help solve the problems 
of manufacture and distribution if the farmers were to get enough fer- 
tilizer. The Congress recognized the national scope of the fertilizer 
problem in the National Defense Act of 1916, which gave the Presi- 
dent power to build plants for making munitions in time of war and 
fertilizers in time of peace. This authorization led to the building of 

Fertilizer-Munitions and Agriculture 155 

two nitrate plants at Muscle Shoals. Various attempts were made by 
the government to dispose of the plants after World War I; they were 
finally turned over to TV A, after lying idle for fifteen years, by the Act 
of 1933- 

The Research Program 

TVA's work on the technology of producing fertilizer 
and munitions is still centralized at the Muscle Shoals plant. The 
plant includes facilities for research on all scales, from laboratory to 
demonstration-plant-size units. Small-scale chemical research is per- 
formed in modern laboratories. Pilot plants are housed in buildings 
that were a part of the original nitrate plant. Demonstration-scale 
plant facilities comprise an electric-furnace phosphorus plant, concen- 
trated superphosphate and calcium metaphosphate fertilizer plants, 
a synthetic ammonia plant, nitric acid plants, and an ammonium ni- 
trate fertilizer plant. In addition, several calcium carbide furnaces are 
maintained in stand-by condition. At Columbia, Tennessee, a small 
plant is used to make fused tricalcium phosphate. 

Scientific research may be fundamental, in the sense that it adds 
(or seeks to add) to the pool of knowledge about a subject or thing; 
applied, in that it seeks new uses or applications for the findings of 
fundamental research; or developmental, in that it undertakes to de- 
velop products and processes for their manufacture. TVA's chemical 
staff engages in research in all three stages, carrying its fertilizer ex- 
plorations from laboratory, where test-tube experiments may produce 
a few pounds of a new material; to pilot plant, where chemical engi- 
neers undertake to produce a few tons; to demonstration-scale plants 
which manufacture thousands of tons annually and demonstrate the 
commercial feasibility of both process and product. TVA's research 
thus follows a new fertilizer from laboratory test to plant production, 
from scientific formula to the end product, sacked and ready for de- 

Suggestions for new explorations are sought both inside and out- 
side TVA. The more promising or the more urgent projects are se- 
lected for experimental study. A fertilizer project is expected to do 
one or more of the following things: provide cheaper fertilizer, yield a 
better fertilizer, conserve natural resources, improve methods of man- 
ufacture by eliminating health or safety hazards, or develop uses for 
by-products of the manufacturing processes. 

The basic resource for the production of phosphate fertilizers is 
phosphate rock, of which, fortunately, the country has relatively 
large deposits. The largest are in Idaho, Montana, Wyoming, and 

156 Twenty Years of TVA 

Utah. Florida also has important deposits. The smallest deposits, in 
Tennessee, represent not more than one per cent of the nation's total 
reserves. Nevertheless these deposits are important because they are 
well located both for military purposes and for use by the large fer- 
tilizer market in the southeastern states. They are the source of most 
of the phosphate rock which TVA uses. 

Notwithstanding the generous reserve of phosphate rock in the 
United States, it is necessary to conserve this resource because the soil 
will continue to need increasing quantities of phosphorus. Recog- 
nizing this need, TVA has urged the use of the large western reserves 
and has co-operated in developing and introducing processes for the 
treatment of rock from these deposits. It collaborated in electric fur- 
nace testing of low-grade Idaho phosphate rock hitherto discarded, 
with the result that the Westvaco Chlorine Products Corporation in- 
stalled an electric phosphorus furnace (the first in the West) at Poca- 
tello, Idaho, in 1949. As of 1953 seven such furnaces were in operation 
in the West, and elemental phosphorus production in that area has 
grown in five years to be one-third of the country's total. 

Most phosphate fertilizer is made by treating phosphate rock with 
sulfuric acid. TVA recognized several years ago, before there was a 
shortage of sulfuric acid, that it might be cheaper to treat the rock 
with nitric acid instead. The nitric acid not only would convert the 
phosphorus in rock into a plant-available form, but would add nitro- 
gen to the product. Experimenting along this line, TVA developed 
several processes for the production of high-analysis nitric phosphates. 
The fertilizer industry has shown great interest in these processes, and 
two nitric phosphate plants are now under construction. 

Much of TVA's chemical research has significance for national de- 
fense. During World War II TVA co-operated with the War Depart- 
ment in the preparation of red phosphorus for use in ammunition. 
The industry had always made red phosphorus by a crude batch 
method. TVA worked out a continuous process and made several 
thousand pounds of material of suitable grade for the War Depart- 
ment in a pilot plant. Later TVA helped a private company under- 
take production by the TVA process. 

During the war TVA made pilot-plant studies of two different 
processes for getting aluminum oxide from clay, as a substitute for 
bauxite ore, the normal raw material. The American aluminum in- 
dustry imports much of its bauxite. Although aluminum producers 
never had to use clay, the processes were — and still are — ready for use 
in case of an emergency. Also as a part of its World War II researches, 
TVA developed a process for making an alloy of aluminum and sili- 

Fertilizer-Munitions and Agriculture 157 

con from clay. Later the Apex Smelting Company blended the pilot- 
plant product with aluminum to make alloys such as those used in 
automobile pistons. The alloys proved as good for many uses as the 
more expensive alloys made from aluminum and silicon metals. The 
company announced that it was going into large-scale production of 
aluminum-silicon alloys from clay. 

An aluminum phosphate ore is available in Florida in large quan- 
tities. It is now considered a waste material, but it is potentially a val- 
uable source of phosphate and uranium. At the request of the Atomic 
Energy Commission, TVA is studying processes for using the Florida 
ore. In order to obtain the uranium economically, TVA is developing 
a process wherein the phosphate in the ore is converted to fertilizer 
and uranium is recovered in one of the steps of the process. Here is an 
example of need for research in the national interest which probably 
would be fulfilled only by government participation. 

Recently, at the request of the Army's Chemical Corps, TVA car- 
ried out intensive research related to the production of "nerve gas." 
The bench-scale research and pilot-plant work that were carried out 
by TVA resulted in important technical and economic improvements 
of the Army's Muscle Shoals Phosphate Development Works built on 
the TVA reservation for the production of intermediate products in 
the manufacture of nerve gas. The research also led to development of 
an alternate process to the one used in the Muscle Shoals plant; the 
simplicity of the process, as compared with the complicated process 
used at the Phosphate Development Works, enabled the Army to 
build a temporary facility at another location and to start production 
only four months after a decision was reached to employ the TVA 
pilot-plant data in the construction of a plant. 

Operation of Demonstration-Scale Plants 

The development of fertilizer processes to a man- 
ufacturing scale and the testing and distribution of the products from 
the plants make up an important part of TVA's research and demon- 
stration program. When the technical staff feels that a new process 
has a good chance of lowering the cost of fertilizer or of introducing 
an improved product, TVA may build a demonstration-scale plant. 
Operation of the plant serves to complete the development of the 
new fertilizer process. The plant produces enough of the fertilizer for 
testing on a large scale, for determining farmer acceptance, and for 
establishing a demand. By thus sharing the risk with industry, TVA 
speeds up improvements in the technology of fertilizer manufacture. 

158 Twenty Years of TVA 

In the year ended June 30, 1952, TVA made 132,000 tons of con- 
centrated superphosphate, 33,000 tons of calcium metaphosphate, 
15,000 tons of fused tricalcium phosphate, and 197,000 tons of am- 
monium nitrate. This tonnage was less than two per cent of the fer- 
tilizer used in the United States during that year. Expressed as plant 
food instead of tons of fertilizer, TVA production was about four per 
cent of the phosphate and a little less than five per cent of the nitro- 
gen fertilizer used. Yet this small part of the national production was 
important, for it stimulated both the use of fertilizer and the improve- 
ment of farming practices. 

TVA started building an electric-furnace phosphorus plant soon 
after the 1933 act was passed. Subsequently, research was done and 
methods were developed to produce pure phosphorus in the plant. 
World War II brought about a large demand for munitions-grade 
phosphorus. TVA increased the capacity of its plant to help meet this 
need, and at the end of the war had five furnaces in operation and a 
sixth under construction. TVA supplied about sixty per cent of the 
elemental phosphorus used by the military during the war, and fur- 
nished producers information that went a long way toward helping 
them produce the remaining forty per cent. TVA also supplied phos- 
phorus to the Army during the Korean War. Operation of the TVA 
furnace has contributed much to the large-scale development of the 
electric-furnace process in this country. 

The output of TVA phosphorus that has not gone into munitions 
has gone into fertilizers. Concentrated superphosphate was the first 
TVA product for which improved processes of manufacture were de- 
veloped. Numerous improvements in equipment and operating meth- 
ods were made in the process which have been adopted by several com- 
panies. National production of concentrated superphosphate has 
grown by leaps and bounds in recent years — from 70,000 tons in 1934 
to 862,000 tons in 1952. The material is now firmly established as a 
commercial product. In light of this increasing production by com- 
mercial firms, TVA is reducing the production of this material. In the 
meantime other phosphate fertilizers are being developed. One of 
these, calcium metaphosphate, has some advantages over present com- 
mercial phosphate fertilizers. In comparison with ordinary super- 
phosphate, "metaphos" contains more than three times as much plant 
nutrient. It is ideally suited for production in the region of the western 
phosphate deposits, where freight to the major fertilizer markets is 
high. Experience to date has indicated that this is a very promising 
fertilizer, although there are three main problems that must be 
solved before it can be generally recommended in all states. First, crop 

Fertilizer-Munitions and Agriculture 159 

response occasionally is too slow for annual grazing crops and fast- 
growing vegetables; second, crop response is not always satisfactory 
from surface applications for pasture crops on acid soils in humid 
regions; third, in most of the western part of the country, where soils 
are calcareous, calcium metaphosphate is not yet recommended for 
use. There appears to be a ready market for metaphosphate in many 
states with acid soils, particularly in the Midwest where the demand 
is greater than the supply. TVA is the only producer but industry is 
considering building units in the West. When others get ready to make 
metaphosphate they will find the job of designing their plants and 
selling the product easier because of TVA's experience with it. 

TVA's plant for making fused tricalcium phosphate fertilizer was 
built after laboratory and pilot-plant research over many years. The 
earliest of this was guided by small-scale work that the United States 
Department of Agriculture had done. The process is relatively simple; 
it requires no sulfur or sulfuric acid; unlike the electric-furnace proc- 
ess for the manufacture of phosphate fertilizers, it requires very little 
electric power; furthermore, the process uses low-grade phosphate ore 
that cannot be used in ordinary processes now employed. Crop-re- 
sponse tests show the product to be a good fertilizer for most crops in 
many areas. 

Most of TVA's chemical research and manufacturing activities 
centered on phosphate until the threat of World War II. A vast ex- 
pansion of the nation's fixed nitrogen capacity for the production of 
explosives then became imperative. To meet the needs of industry, ag- 
riculture, and particularly the military, the government spent more 
than $250,000,000 to build ten ammonia plants. The ammonia plant 
that TVA inherited as part of World War I, Nitrate Plant No. 2, was 
hopelessly out of date. Early in 1940 the Secretary of War informed 
TVA that it should make plans to use the plant for the production of 
ammonia. In July, 1940, TVA proposed to build a modern synthetic 
ammonia plant. The proposal was opposed by industry on the grounds 
that it would lead to government competition after the war. Four 
months later, after much controversy, the TVA plan was approved 
and TVA hired an engineering firm and two experienced consultants 
to design the plant. By the time the plant was completed in Septem- 
ber, 1942, the ammonium nitrate part of the old plant had also been 
put into shape for use. 

The military need for ammonium nitrate fell off in the spring of 
1943. At that time there were acute food shortages in most parts of the 
world, and transportation facilities were over-strained. There was also 
a great shortage of nitrogen fertilizer. TVA worked with the Depart- 

160 Twenty Years of TVA 

ment of Agriculture and with industry on modifying the process to 
make the ammonium nitrate more suitable for use as a fertilizer, and 
diverted its output of this concentrated source of nitrogen almost im- 
mediately to agricultural uses. It also gave other producers details of 
the manufacture of ammonium nitrate fertilizer. TVA's part in the 
nitrogen program led to process improvements, helped adapt ammo- 
nium nitrate to agricultural use, improved fertilizer practices through 
its use in the test-demonstration and educational sales programs that 
greatly expanded the market for nitrogen fertilizers, and helped pro- 
vide the farmer with a cheaper form of nitrogen. Practically no am- 
monium nitrate was used as fertilizer prior to World War II, whereas 
it is now the major straight-nitrogen fertilizer. 

Seven of the ten government synthetic ammonia plants were put 
up for sale or lease after the war. By 1950, six plants had been turned 
over to private companies. These plants cost the government 
$142,500,000; they were sold for $49,923,800. The TVA plant is the 
only one of the original ten that is being amortized at the full wartime 

Financing Research and Production 

By far the largest part of the money for research is 
obtained by direct appropriations from Congress. Congress also ap- 
propriates funds for the design and construction of new demonstration 
plants and for replacement or improvement of existing plants. Major 
plant units are built only with the approval of the Bureau of the 
Budget and Congress. The cost of construction of a plant is a capital 
expenditure that is recovered as depreciation in the sale of products 
and in the credit received from transfers of fertilizers to the test- 
demonstration program. 

Some TVA fertilizer goes into farm test-demonstrations and other 
agency programs (see pp. 164 ff.) . The rest is sold to farmers through 
co-operatives and industry distributors in a selected-use program. The 
primary purpose of the sales program is to extend the market for high- 
analysis fertilizers to new uses, new users, and new areas and to pro- 
mote the adoption of improved fertilization practices as recommended 
by the land-grant colleges. Purchasers collaborate with TVA in the 
educational aspects of the program. Generally, the sale prices of the 
fertilizers are in the low range of the market prices for equivalent 
materials. National defense materials are sold to the Army on a cost 
basis. The net income of the fertilizer-munitions program in 1953 was 
about $2,500,000; net income over a period of twenty years has been 

Fertilizer-Munitions and Agriculture 161 

approximately $10,000,000. Income from the fertilizer and munitions 
program is paid into the United States Treasury each year, except for 
that part determined by the TVA Board as necessary for the produc- 
tion, sale, and distribution of chemical products. 

The Army and other government agencies have paid for some of 
TVA's national defense research. Private companies often ask that 
research be done for them at their expense. TVA is glad to co-operate 
in this fashion when the job is one that will further its program and 
when its technicians are particularly qualified and equipped to do the 
job. The work that was done for Westvaco on the production of phos- 
phorus from a low-grade Idaho phosphate rock is an example. West- 
vaco paid TVA for the expense of operating its pilot plant during the 
test period. There was no charge, however, for the subsequent techni- 
cal assistance furnished the company for the design and operation of 
its furnace. 

TVA's fertilizer-munitions research and production program is a 
research, testing, and demonstration program. TVA undertakes the 
parts of the total job that are not being done by others. Its purpose is 
not to produce standard products by standard methods, but to explore 
new scientific frontiers and to develop new or improved products and 
processes. TVA does not manufacture fertilizer for commercial distri- 
bution; on the contrary it offers the results of its research and devel- 
opment work for general public use and distributes the products of 
the plant for use only in demonstration and educational programs. It 
is TVA's objective to do everything it can to help others use successful 
processes, equipment, design, and operating techniques resulting from 
the work. TVA publishes articles in technical and trade journals 
and issues comprehensive reports as government publications. Hun- 
dreds of technical inquiries are answered by correspondence annually. 
Royalty-free licenses are granted to all who wish to use TVA patents. 
The large number of technical visitors to the TVA plants and labora- 
tories are given full opportunity to examine reports, to learn about 
the laboratory work and pilot-plant and large-scale operations, and to 
discuss their questions with members of the TVA staff. Detailed design 
drawings are made available to firms planning to install equipment 
similar to TVA's. 

TVA works co-operatively with a great variety of agencies, public 
and private, in its research and development program. Among these 
are the state land-grant college agricultural experiment stations and 
extensions services, the Department of Agriculture, the Department 
of the Interior, farmer organizations, industry associations, and pri- 
vate companies and industries. Examples of co-operative effort are 

162 Twenty Years of TVA 

found in frequent meetings attended by representatives of two or 
more agencies; exchange of ideas, information, and data with scientists 
on other research staffs; joint planning of research projects; collabora- 
tive pursuit of research and testing work; exchange of consultative 
services; and, occasionally, joint authorship of scientific articles, mono- 
graphs, and reports. TVA's chemical research and development pro- 
gram in a very real sense is a collaborative enterprise, with many 
hands and many minds contributing to its effectiveness. Notwithstand- 
ing the many co-operative relationships, the basic responsibility of 
course remains with TVA's scientific and administrative staffs. 

Fertilizer Distribution and Use 

The three major phases of fertilizer research and 
development work have their counterparts at the distribution and use 
stage. Laboratory test-tube research is paralleled by pot tests in the 
greenhouse, pilot plant research by field plot tests, and demonstration- 
scale plant operation by widespread introduction of fertilizers through 
test-demonstration farms and educational sales programs. It is the pur- 
pose here to observe the method by which the bridge is built from 
fertilizer production to farmer acceptance and practical use on the 

Basic Agronomic Research 

A fertilizer product may look ever so attractive 
from the standpoint of content of one or more of its plant nutrients; 
yet, if there is something about the chemical composition of the ma- 
terial that keeps the nutrient from becoming available to plants, or if 
there is some reaction with the soil that creates a condition unfavor- 
able for plant growth, the material may be unsatisfactory as a ferti- 
lizer. The first evaluation of a laboratory material with plants is made 
in the greenhouse. The conditions here for plant growth are, of 
course, highly artificial as compared with those found on a farm. 
Light, temperature, and moisture can be closely controlled, and the 
plants grow in small amounts of soil in pots. The answer to a single 
question is sought: is this product of the test tube effective enough 
agronomically in comparison with commonly used fertilizers to justify 
further work on the production process? If it is, the chemical engi- 
neers are ready to go ahead with the design and operation of a pilot 
plant to see how the process works on a little larger scale and to de- 

Fertilizer-Munitions and Agriculture 163 

termine whether it can be produced and marketed economically in 
competition with other products. 

If all goes well in the pilot plant and the process still looks prom- 
ising, a more extensive evaluation of the product is undertaken. This 
is done on small field plots by the agricultural experiment stations. 
Field plot tests are made under varied soil and climatic conditions 
and with several major crops so that the tests will be representative of 
conditions throughout the country. This setting is considerably more 
realistic than the greenhouse, but again many conditions are more 
closely controlled, under scientific supervision, than they can be on 
an operating farm. 

It is important to note that there is a major difference between the 
way production research and agronomic research are carried out. The 
Office of Chemical Engineering conducts its own research with its 
own staff chemists and chemical engineers. In contrast, the agronomic 
research is decentralized and conducted indirectly through contractual 
arrangements with the agricultural experiment stations of the state 
land-grant colleges. It is fairly obvious why the direct method was 
adopted in the first instance. The fact that TVA was made custodian 
of the government plant, which was required to be geared to the alter- 
nate production of fertilizers and munitions, made any other course 
untenable. It may not be so obvious why TVA did not also set up its 
own facilities for testing the materials produced. It was not for reasons 
of economy alone, although there is no doubt that the use of existing 
federal and state facilities has resulted in substantial savings. Rather, 
TVA concluded that supplementing the personnel and facilities of the 
existing institutions to get its work done would strengthen those insti- 
tutions, and in addition would take advantage of their familiarity with 
the soils and other local conditions and of their established relation- 
ships with the educational forces and other groups. Thus, TVA's work 
has been done better and cheaper and at the same time has served 
a developmental purpose. 

In addition to the seven experiment stations in the Valley region, 
TVA selected four experiment stations outside the Valley, located in 
major soil, climate, and farming regions of the country, to carry out 
its research program on fertilizers. These non-Valley states are Wash- 
ington, Colorado, Iowa, and New York. The stations are provided 
with both materials and funds for personnel to carry out special re- 
search projects. These four stations, together with those of the seven 
Valley states, provide reasonably adequate national coverage for the 
TVA fertilizer research program. In addition, TVA has furnished some 

164 Twenty Years of TVA 

materials to the experiment stations in each of the forty-eight states, 
and continues to make available small quantities of TVA fertilizers 
for research upon request. 

TVA has a small staff of agronomists to plan this work, to report 
and interpret results obtained, and to administer the contractual rela- 
tionships. In supervising the contractual activities, TVA's agronomists 
have been able to assist in improving the agronomic research tech- 
niques employed by the co-operating institutions by spreading among 
them the best ideas and techniques picked up in their nationwide 
contacts. TVA also holds an annual conference of co-operating agron- 
omists. This, in addition to the contacts of the staff in the individual 
states, helps to secure mutual understanding of problems and to de- 
velop satisfactory ways of solving them. 

Farm Test-Demonstrations 

Once demonstration-scale production of a fertilizer 
is under way, TVA is ready to begin introducing the product to farm- 
ers. The first phase of this step is getting the fertilizer used on test- 
demonstration farms. These farms have been such an important part 
of the program of agricultural development and watershed protection 
in the Tennessee Valley that they merit special attention in connec- 
tion with agricultural developments in the region. At this point, how- 
ever, the discussion will center on test-demonstration farms as a means 
of familiarizing farmers throughout the country with fertilizers that 
are different in some respects from those they have been using. 

It should be recognized at once that this statement of the nature of 
the test-demonstration program greatly oversimplifies the matter. In 
many instances, especially in the early years, the problem was to ac- 
quaint the farmer with the benefits of fertilizer, since he frequently 
used none at all. Further, TVA's interests have always gone far beyond 
the mere introduction of a particular fertilizer. TVA is interested in 
improved ways of using fertilizer as well as in the use of improved 
forms of fertilizer and also in the effects of both on the operation of 
the whole farm as a single management unit. TVA has always recog- 
nized that soil productivity cannot be bought in a bag, that achieve- 
ment of sustained production involves the proper use of fertilizer in 
good cropping systems along with other farm practices which result in 
efficient production and increased farm income. This means finding 
out something about the economics of fertilizer use; it also means giv- 
ing farmers and their agricultural advisers an opportunity to voice 

Fertilizer-Munitions and Agriculture 165 

their judgments about the value of fertilizers and fertilization prac- 
tices. Test-demonstration farms have been operated for all these pur- 
poses, in addition to the essential introductory purpose of getting a 
new or improved fertilizer established. 

Fertilizers introduced through the test-demonstration activity have 
included concentrated superphosphate since 1935, calcium metaphos- 
phate since 1938, fused tricalcium phosphate since 1941, and ammo- 
nium nitrate for the period of 1943 to 1946. The work started in 1935 
in the Tennessee Valley states. In 1937 other states began to evince an 
active interest, and since then 28 states outside of the Valley have par- 
ticipated in the program for varying lengths of time. The activity has 
always been more intense within the Valley because of TVA's special 
interest in the agricultural development of this region. In the 125 
counties of the Tennessee watershed, 12,894 unit test-demonstration 
farmers have co-operated; 16,655 unit test-demonstration farms have 
been set up in the rest of the country. In addition, 38,428 area test- 
demonstration farmers have co-operated in community or watershed 
demonstrations within the Valley. 

As in the case of agronomic research, the test-demonstration work 
is carried on in each state through co-operative arrangements with 
the land-grant colleges. More immediately, it is carried on through 
the agricultural extension services of the colleges. Through contracts 
and project agreements, TVA reimburses the colleges for certain costs 
in connection with the added work. The major expense has been the 
salary and travel expenses for assistant county agents who do most of 
the work directly with test-demonstration farmers. 

TVA also provides the experimental fertilizer which is used to help 
carry out the plans made by the farmer with the aid of his extension 
adviser. Formerly all test-demonstration fertilizers were supplied with- 
out charge; more recently a charge has been made for the fertilizer, 
although the price is set well below the selling price of commercial 
fertilizers in recognition of the farmer's services in supplying farm rec- 
ords, reporting on the condition of the fertilizer materials under farm 
conditions, and making his farm available for educational tours and 
meetings. In general the delivered cost to the farmer for test-demon- 
stration phosphates runs about fifty per cent of the price of commer- 
cial goods. The concession by TVA on the cost of the fertilizer is gen- 
erally a small fraction of the increased expenditures required of the 
farmer making use of it. Typically he must supply lime and other fer- 
tilizers to meet his complete requirements for plant nutrients in a 
balanced plan. In addition he may frequently need to make substan- 

166 Twenty Years of TVA 

tial adjustments in his operations, involving in some instances addi- 
tional capital outlays, in order to carry out fertilization and related 

Among the most important contributions of the test-demonstration 
program has been the creation of a more effective relationship be- 
tween research workers, extension workers, and practical farmers. 

Postponing momentarily a discussion of tangible results for agri- 
culture in the Tennessee Valley, it seems fair to say that nationally the 
unit test-demonstration farms have greatly stimulated the develop- 
ment of the whole-farm approach to agricultural improvement by the 
forces of the agricultural colleges. More and more states are featuring 
activities in which groups of farmers make use of advisory assistance 
from the Agricultural Extension Service to improve their farm plan- 
ning and management procedures. In many cases the farmers them- 
selves are paying much of the cost of the special services provided, al- 
though they too are rendering a valuable public service in demon- 
strating ways to achieve sustained production while conserving and 
improving the soil resource in their custody. In Missouri the test- 
demonstration work with TVA fertilizers is integrated with the "Bal- 
anced Farming" program. There test-demonstration farmers are giv- 
ing special attention to fertilization problems; among other things, 
they are trying out deep placement of fertilizers. Work at the experi- 
ment station indicates that this practice may increase yields markedly, 
particularly during periods when moisture is limited. 

Wide-Scale Distribution 

The first big buyer of TVA fertilizer was the Agri- 
cultural Adjustment Administration. In 1937 the AAA began buying 
TVA's concentrated superphosphate and supplying it to farmers in 
lieu of cash benefits earned in the agricultural conservation program. 
This continued until about 1942, the tonnage taken by AAA grow- 
ing from 17,183 tons in 1937 to 68,416 tons in 1941. With the coming 
of World War II the government continued to be the major consumer 
of TVA products. Much of the phosphorus was used directly to make 
munitions; quantities of both concentrated superphosphate and cal- 
cium metaphosphate were taken for export to Britain to aid that 
country's food production efforts. The saving of shipping space af- 
forded by these concentrated products was an important TVA contri- 
bution to the war effort. 

During the war, TVA's capacity for munitions-fertilizer manufac- 
ture expanded enormously. The nitrate plant was modernized to pro- 

Fertilizer-Munitions and Agriculture 167 

duce ammonium nitrate for munitions, but production was changed 
to fertilizer before the end of the war. The phosphate facilities also 
were substantially expanded to meet emergency needs. These wartime 
developments greatly increased TVA's opportunities for peacetime 
service to agriculture. 

Until 1946, test-demonstration farmers in the Valley had been re- 
ceiving TVA fertilizers through county test-demonstration or soil ero- 
sion control associations, which they had formed. In January of that 
year, Valley Counties of Kentucky Cooperative, a federation of the 
seven Valley county associations, became the first Valley co-operative 
to enter into an experimental distribution contract for sale of TVA's 
phosphatic fertilizers. Other Valley co-operatives followed soon there- 
after, so that at the close of 1946 memoranda of understanding were in 
effect with nine Valley co-operatives, and negotiations were in progress 
with four others. This covered distribution in all the Valley states. 
Outside the Valley two regional co-operative organizations, Associated 
Cooperatives, Inc., serving mainly southeastern and southern states, 
and Central Farmers Fertilizer Company, serving the Midwest, in 
1946 entered into contractual arrangements with TVA which were 
similar to contracts effective in the Valley. During the next two years 
Western Fertilizer Association, another regional co-operative organi- 
zation, took on the responsibility for distribution in the northwestern 
states. This distribution setup was maintained, in general, until 1950, 
when TVA first entered into distribution contracts with private ferti- 
lizer firms. 

From 1946 on, private fertilizer firms have requested an opportu- 
nity to distribute TVA fertilizers. In 1948 the National Fertilizer As- 
sociation protested TVA's policy of distribution exclusively through 
co-operatives and requested that private firms be permitted to partici- 
pate. In response to an invitation to make a specific proposal, NFA 
took the position that TVA should work out arrangements with any 
units in the industry which might wish to participate. For a consider- 
able time TVA had recognized the need for carrying on distributor- 
dealer demonstrations in the educational sales program with TVA 
fertilizers. A decision was made, therefore, to explore the possibility 
of effective distribution experiments with selected private firms. Ac- 
cordingly, in 1950 approximately twenty companies which had indi- 
cated some interest in the distribution of TVA fertilizers for other 
than traditional uses were selected for consideration. From follow-up 
contacts it became apparent that most firms were interested only in 
obtaining additional supplies of fertilizers for use in traditional pat- 
terns. A few companies, however, indicated some interest in distrib- 

168 Twenty Years of TVA 

uting TVA fertilizers under the educational procedure set forth by 
TVA and employed by the co-operatives. Contracts were entered into 
with seven firms, selections being made on the basis of such factors as 
type of organization, distribution area, distribution policies, and abil- 
ity and willingness to carry out the purposes of the TVA distribution 
contracts. Eight private fertilizer manufacturers now have contracts 
to distribute TVA fertilizers in parts of fifteen states. 

It is TVA's present policy to make its fertilizers available for new 
or improved uses which are designed to improve systems of fertiliza- 
tion. Among such uses are the following: 

1. Fertilization of specific crops not generally fertilized in order to ac- 
complish desirable adjustments in farming systems. 

2. Fertilization of specific crops, following recommended practices supe- 
rior to the practices generally followed in the area, such as increasing 
the rate of application. 

3. Fertilization of all crops on the farm in accord with a whole-farm plan 
developed with the advice and assistance of the land-grant college. 

TVA has relied upon the land-grant colleges, agencies of the United 
States Department of Agriculture, and the distributors of TVA ferti- 
lizers jointly to propose specific uses which meet these criteria. It is 
the responsibility of the appropriate agencies in each state to deter- 
mine the agricultural programs which they will encourage; but TVA 
must assume responsibility for determining whether a proposed pro- 
gram is appropriate for TVA fertilizers. It has continually emphasized 
the fact that TVA fertilizers are not intended to supply the entire fer- 
tilizer requirements for any particular use. TVA proposes to make 
available only a sufficient quantity to demonstrate, on a fairly broad 
scale, improved fertilization practices or systems which are recom- 
mended by the college but which have not been generally adopted by 
farmers. It seeks the guidance of the public agricultural agencies in 
each state in determining the quantities necessary to accomplish this 

In thirty-five states that receive significant quantities of TVA fer- 
tilizers certain selected uses have been agreed upon and distribution 
is being made for these uses. The major part of the TVA fertilizer is 
being distributed for use on sod crops, such as permanent pastures, 
temporary grazing crops, and grass seed production. A number of 
states have proposed use of TVA fertilizer on row crops such as cotton, 
corn, tobacco, citrus crops, and sugar cane; in fifteen states where such 
projects were presented as well-defined demonstrations of improved 
fertilizer use on a specific crop which is recommended by the land- 

Fertilizer-Munitions and Agriculture 169 

grant college but not generally adopted by farmers, they have been 
approved subject to certain conditions regarding farming practice. 
With the exception of a few states, all of the improved uses which have 
been adopted provide for fertilization of specific crops without much 
expressed relationship to the whole-farm system. 

After a program of improved uses is agreed upon for a state, it be- 
comes the primary responsibility of the distributors to see that TVA 
fertilizers are sold according to that program. The selected co-opera- 
tives and private firms have obligated themselves to participate in 
improved fertilizer-use programs and to sell TVA fertilizers to farmers 
for the special purposes designated. A small TVA staff assists the 71 
wholesale distributors in the development, execution, and evaluation 
of the distribution program. The land-grant college in each state is 
urged to appraise the job done by every distributor in that state, in 
terms of the program agreed upon. The co-operation of the appropri- 
ate agencies and organizations in each state is sought further in a con- 
tinuing re-evaluation of the program itself, to the end that constant 
improvements may be made. 

The programs for the use of TVA fertilizers are national in scope 
and implication. To quote from a recent article by Gordon Clapp: 

The long-range benefits of the TVA fertilizer program are not confined 
to any single group or area. Rather they accrue to producers, distributors, 
and users of fertilizer, regardless of whether or not they handle a single 
sack of TVA fertilizer. By strengthening the productive enterprise of 
farming and those who serve it, the TVA program serves the entire Na- 

In serving the nation in the future, TVA will continue to maintain 
its role as an innovator. Developing new processes and new fertilizers, 
developing new means of lowering the cost of plant nutrients to farm- 
ers, developing better ways of using fertilizers — these are the tasks 

Agricultural Practice in the Valley 

The emphasis which has been placed on the na- 
tional character of TVA's fertilizer research, development, and distri- 
bution program should not be allowed to obscure the agency's basic 
concern for agricultural practice in the Tennessee Valley. That con- 
cern was underscored by a statement made by the TVA Board of Di- 
rectors before the House Committee on Military Affairs in April 
1935. The statement read, in part: 

170 Twenty Years of TVA 

The Board early adopted a policy of encouraging the use of phosphate 
fertilizer in a regional program of redirected farm practices. The objec- 
tive is a readjusted agricultural system by which the proportion of the 
land devoted to soil binding and soil improving crops, such as grasses, 
legumes, and small grains, might be increased in order to reduce the pro- 
portion of the acreage in bare lands and cultivated crops. Here was truly 
a genuine opportunity to relate improved fertilization to the conservation 
of the land by preventing soil erosion and coincidentally to the conserva- 
tion of the streams by preventing the infiltration of silt. . . . 

Thus it was recognized in the early days of TVA that its authorization 
for fertilizer research and demonstration was a powerful tool for use 
in the development of the agricultural resources of the Valley. 

Other than the river and some national forests and state parks, the 
resources of the Tennessee Valley are for the most part in private 
ownership. This means that the owners of these resources control their 
use. The resources will be used wisely or not depending upon the 
utilization practices of their owners. Thus the normal, day-to-day de- 
cisions of the many thousand owners of the area's resources are of 
crucial importance to the improvement of resource use. Two aspects 
of the way this private decision-making process works should be men- 
tioned. First, the decisions of the individual as to the use of his re- 
sources are affected not only by his own objectives and by factors un- 
der his control; they are also conditioned in part by the decisions of 
others. Second, farmers frequently know better than they do. Thus it 
occurs that in the process of making decisions as to how to fit together 
one's set of resources to maximize one's satisfactions, there are fre- 
quently some resources, including knowledge, that are not used. These 
two ideas suggest that in a regional development program attention 
needs to be directed to the broad effects of strategic developments that 
may change the pattern of resource use. This is the basis for TVA's 
continued study of emerging problems in the Tennessee Valley. It also 
explains why in many instances TVA has gone beyond the usual 
limits of a job to work on collateral problems and to aid in exploiting 
opportunities which the main job presented. The improved use of 
agricultural resources is frequently made possible by non-agricultural 
activities which widen the range of choice of actions that the farmers 
take step by step. 

For example, Valley farmers with electricity can choose to be dairy- 
men, whereas that choice is all but denied them without power for 
refrigeration, milking machines, and other equipment. Some of them 
can also choose to leave agriculture and work in factories where elec- 
tric energy provides jobs. When TVA commenced construction of its 

Fertilizer-Munitions and Agriculture 171 

dams, the demand for construction workers in the area increased 
sharply. Many farm people were hired on these construction jobs and 
were trained in nonagricultural skills while working there. TVA also 
conducted special educational programs to teach new skills, thus 
broadening the job opportunities available to the former farm people. 
For some, this experience was the first step toward a nonagricultural 
career; for others, it proved to be a means of earning cash to invest in 
farm improvements. Partly as a result of such changes and in conse- 
quence of broad economic trends, there has been a substantial adjust- 
ment out of agriculture. In 1929 agriculture employed 56 per cent of 
the Valley's workers; in 1950, only 36 per cent. During the same period 
employment in manufacturing increased from 14 per cent to 23 per 
cent of all workers. 

For most persons this movement out of agriculture has meant a 
considerable increase in income. On the other hand, it has created 
some real land-use and social problems. For one thing, 47 per cent of 
the farms in the Valley are now either part-time or residence farms 
and 38 per cent of the farm families receive more income from non- 
farm sources than from sales of farm products. As yet the full impact 
of this industrial expansion upon agriculture cannot be appraised, 
but TVA and the state colleges of agriculture, among others, are in- 
creasingly confronted with problems which require more knowledge 
of the relationships between agriculture and industry. In recognition 
of this fact, TVA's Industrial Economics Branch and its Agricultural 
Economics Branch have combined to study these problems. In addi- 
tion, some of their "on-the-farm" aspects are being studied on test- 
demonstration farms in western Kentucky. Concurrently, the Indus- 
trial Economics Branch is analyzing the productivity and trainability 
of labor as another aspect of the same set of problems. 

Program and Progress 

Agricultural development today is based in large 
part upon the adoption of new technologies of farming which come to 
farmers from the experiments of research workers. One such techno- 
logical innovation which was of dominant importance in the Tennes- 
see Valley and in the rest of the Southeast as well was the use of phos- 
phate fertilizers on grass and legumes. In the mid-thirties this practice 
was not common on southern farms, nor for that matter anywhere else 
in the United States. Nevertheless it was well known, particularly 
among technicians, that grasses and legumes would make good growth 
when lime and phosphates were used on soils well supplied with pot- 

172 Twenty Years of TV A 

ash — experiments made before 1920 had proved that. Efforts had been 
made to bring the new technology to the attention of the farmers, 
who, however, proved reluctant to change. In the process of deciding 
whether to adopt a new technology in which added costs are in- 
volved, farmers want to know if they will profit by the added expense. 
The data available did not provide an answer to that question. In ad- 
dition, the use of a fertilizer may seem to be a simple thing, but in 
this case it was an innovation with rather complex effects. A decision 
to use phosphates posed a whole bundle of new problems: how to 
manage pastures, whether to build barns in which to store hay, how 
many and what kinds of livestock to keep, where to get the capital to 
build the barn or buy the cows, and so on. In some way, farmers 
needed to see (1) how the fertilization technology fitted into a whole 
farming system; and (2) whether, in terms of the farm business, it 
paid. The device developed in response to this need was the test- 
demonstration farm. 

Notwithstanding widespread initial resistance, it did not take long 
for results to begin to show. Gradually the demonstration farms 
changed. More land went under grass, less was devoted to corn and 
cotton; yields improved, more livestock was carried, houses were 
painted. Neighbors began to visit these farms and ask questions. The 
records collected began to show that it did pay to use phosphates on 
grasses and legumes. Electricity was coming into the Valley at the same 
time, and electric lights, home conveniences, and other labor-saving 
devices began to be acquired. The conversion of the farmers was slow 
but steady. In a recent study of nondemonstration farms in western 
North Carolina, almost no one could be found who did not accept 
the doctrine of phosphate use, and 86 per cent of the farmers inter- 
viewed had used phosphates on pastures. 

At the same time, the device utilized for getting adoption of phos- 
phate fertilization has proved most useful in procuring adoption of 
other new farm production techniques as well — adequate fertilization 
for other crops, new crop varieties, improved crop and livestock man- 
agement, adoption of machinery, better planning of farm operations. 
These developments have been accompanied by more adequate ac- 
counting records of farm income and expenses and by more careful 
planning of the farm home operations for better family living. 

It is not easy to measure the results on a region of a demonstration 
device, but there is evidence that the work initiated by TVA is paying 
off. Fertilizer use is much expanded. In the four states for which data 
are available (Alabama, Mississippi, North Carolina, and Tennessee), 
there was an increase from 1935 to 1949 of 314 per cent in fertilizer 

Fertilizer-Munitions and Agriculture 173 

use in the Valley areas, in contrast to an increase of 114 per cent in 
the non-Valley portions. Corn acreage in the Valley has decreased 
20 per cent since 1930, cotton acreage 18 per cent. Small grain acreage 
is up 17 per cent, hay acreage 57 per cent. Sixteen per cent more land 
is in pasture. Cattle and calves on the farms are up 38 per cent. The 
value of farm products, adjusted for price increases, is 17 per cent 
above what it was twenty years ago; and, while in 1930 the ratio of 
gross income from crops to that from livestock was roughly 60:40, in 
1950 it was about 50:50. 

Although major emphasis has been given to education work, small 
but important research projects on agricultural development problems 
have also been carried on. Gaps in technical knowledge have been 
closed. For instance, in co-operation with the USDA Soil Survey Divi- 
sion and the state agricultural experiment stations, more than 70 per 
cent of the land area of the Valley has been covered by modern soil 
surveys. This new knowledge of the soils is serving in many ways to 
facilitate other research as well as educational programs under way in 
the area. Further, new methods usually lead to new problems which 
require new research. Thus, research was carried on to find a solution 
to the hay spoilage problem; the result was the development of the 
barn haydrier. Other research has dealt with food crop processing 
problems (particularly quick freezing), farm machinery adapted to 
the needs of farms of the region, the economics of poultry production, 
and farm leasing arrangements adapted to areas where industrializa- 
tion is rapidly taking people off the farm. 

The test-demonstration device also assisted farm groups in attack- 
ing problems beyond the capacity of the individual farmer. One seri- 
ous difficulty in the region in 1933 was the lack of united effort on the 
part of the people in coping with these problems. The test-demonstra- 
tion farms gave impetus to the creation of two types of effective farmer 
organizations — rural community organizations and farmer co-opera- 
tives. In selected Valley sections TVA conducted area test-demonstra- 
tions, making its fertilizers available to all farmers in the area. In these 
areas the farmers formed associations which in many instances have 
grown into permanent community organizations. In most cases, these 
organizations became so effective in meeting community problems 
that most of them continued to function after TVA stopped supplying 
fertilizer. The rural community movement in Tennessee, with 700 ac- 
tive communities, is an outgrowth of this effort and has become an 
outstanding example of group action by local initiative. 

TVA commenced the test-demonstration program in 1935; by the 
end of that year, 95 soil erosion control associations with less than 

174 Twenty Years of TVA 

1,000 members had been organized to sponsor the test-demonstration 
activities and to handle the fertilizer shipments. By 1945, there existed 
118 organizations in the Valley with more than 38,000 members. Soon 
after their organization, many of the associations commenced to 
branch out into ownership and use of terracing equipment, procure- 
ment and distribution of agricultural limestone, marketing of farm 
crops, and similar activities designed to meet the needs of the ad- 
justed farm programs. In 1933, the Valley contained only 42 purchas- 
ing co-operatives and most of these did a modest volume of business; 
they were poorly financed and organized, and few had warehouses or 
salaried managers. By the end of 1949, six federated co-operative as- 
sociations and ten unaffiliated county organizations served all but ten 
of the 125 Valley counties. The federated co-operatives did a business 
of more than $7,000,000 in the sale of fertilizer, seed, and other 
farm supplies. They had total assets of $1,500,000 and their net 
worth was more than half that sum. More than 100 county organiza- 
tions had warehouses, nearly 100 had full-time managers, and alto- 
gether they employed 300 persons and, during 1949, did about 
$14,000,000 worth of business. 

TVA fertilizers are usually sold in the lower range of the going 
market price, but if a particular program of fertilizer use requires an 
additional incentive, the fertilizers may be offered at a discount. Am- 
monium nitrate, for example, is sold for a few months of each year at 
a discount for use largely on winter pasture and cover crops. This pro- 
gram was developed after discussions with colleges of the region and 
USDA agencies led to the conclusion that improvement in winter 
pasture and cover crops should be further encouraged, and that the 
sale of ammonium nitrate at a discount would be effective in bringing 
about the desired results. Again as an example, the Tennessee Exten- 
sion Service, Production and Marketing Administration, Soil Conser- 
vation Service, Tennessee Department of Vocational Education, and 
distributors in the area have executed an agreement setting forth the 
specific uses of ammonium nitrate sold at discount and the responsi- 
bility of each of the participating organizations in administering the 

Methods of Program Conduct 

TVA's major work in agriculture has been in re- 
search and education. Long before TVA was established, Congress had 
established other governmental facilities for research and education in 
agriculture. These are the Department of Agriculture and the state 

Fertilizer-Munitions and Agriculture 175 

land-grant colleges with their experiment stations and extension serv- 
ices. Obviously, there were possibilities in this situation for duplica- 
tion of effort and conflict of programs. The fact that there has been 
little conflict and no duplication is the result of a decision on method; 
a decision to work with the already established agricultural agencies. 
Underlying this decision was recognition of the fact that mutual in- 
terests between agencies can mean either conflict or collaboration, de- 
pending upon the willingness and ability of the agencies to work out 
arrangements for co-operation. 

Various contracts for the conduct of research and demonstration 
projects by the agricultural colleges of the Valley states were made 
shortly after TVA began operations. In 1934 a joint memorandum of 
understanding was executed by the land-grant colleges of these seven 
states, the Department of Agriculture, and TVA. This set forth the 
principles of co-operation among the agencies on agricultural research 
and educational activities in a unified regional program, and set up a 
procedure for co-ordinating joint activities. In 1935, the land-grant 
colleges and TVA entered into so-called "master" contracts for a joint 
program of watershed protection and agricultural development. Re- 
cently these contracts have been superseded by master contracts of 
broader scope which provide for co-operation in resource develop- 
ment activities outside of agriculture. They contain the following 
statement of policy: 

The parties believe that with respect to programs in which Federal, state 
and local agencies possess substantial mutuality of interest, harmony of 
objectives, and analogy of responsibilities, their activities should be mu- 
tually planned and projected. Furthermore with respect to those activities 
for which the state and local agencies already have, or with reasonable 
Federal assistance can acquire, organizations, facilities and personnel ade- 
quate for effective performance, the Federal agency concerned should not 
establish duplicating organizations and facilities but should rely upon 
existing state and local agencies to the fullest practical extent consistent 
with the effective discharge of its own statutory responsibilities. 

This is a reaffirmation of the policy of co-operation that has existed 
between TVA and the agricultural colleges since 1934. 

TVA's decision to use and develop existing institutions already fa- 
miliar to the people of the region placed stress upon individuals and 
upon their normal ways of working. By integrating the activities of 
special interest to TVA with the going programs, TVA activities 
would stimulate the whole research and educational program and 
further develop the resources of the region. The validity of this proce- 
dure is attested by the steady growth in the research and education 

176 Twenty Years of TVA 

facilities of the region and by the development of both farmer organi- 
zations and individual farmer leadership in conducting programs of 
agricultural improvement. The state and local agencies are bearing an 
ever greater share of the cost of the joint activities in which TVA par- 
ticipates. Many basic regional objectives are being effectively pursued 
through the selected-use sales programs in which the educational 
agencies and the distributors co-operate with little if any financial 
contribution from TVA. 

A program of agricultural research and development must above 
almost everything else remain flexible. It must of course remain re- 
sponsive to scientific discoveries, and it must stay alive to progress in 
administration. This last is particularly important in the case of a co- 
operative program, for here are involved a variety of agencies and 
organizations each with its own resources, its own staff, its own drives, 
its own program interests. Here constant adaptation is of the essence 
of fruitful co-existence. 

TVA is engaged continuously in an intensive review of its agri- 
cultural activities in an effort to keep abreast of desirable changes in 
direction and emphasis. Such review implies constant or at least fre- 
quent modifications in program. For the foreseeable future some of 
the emergent needs may be discerned. In the field of fertilizer research 
there is much basic soil and plant nutrient work to be done. Basic 
studies are needed that will assist farmers in their planning; fertilizer 
rate studies, for example, would indicate what plant nutrients in what 
quantities pay best. Research in the economic field should stress the 
analysis of major regional problems, including farm size, farm credit, 
labor use, farm mechanization, farming systems, part-time farming, 
and community development. Test-demonstration work should place 
added emphasis on farm and home planning and budgeting. In the 
annual reviews of fertilizer distribution programs there appears to be 
a need for greater stress on cost of fertilizers per unit of plant food as 
a means of increasing net farm income and improving soil fertility. 

Whatever the shift in emphasis and direction in specific activities, 
in its over-all program TVA will continue to give major emphasis to 
developing people and their institutions through close co-operation 
with the agencies, communities, and individuals of the region. TVA 
believes this approach will continue to pay dividends in new ideas, 
better understanding of mutual objectives, and greater accomplish- 
ment in the Valley and throughout the nation. 

Chapter i 1 

By J. O. Artman 

One of tva's purposes, as set forth in the Act of 1933, 
is to bring about in the Tennessee Valley the "proper use of mar- 
ginal lands and the reforestation of all lands suitable for reforesta- 
tion." Thus did the authors of the Act recognize the importance of 
forests and forestry in the conservation and development of the re- 
sources of the region. Thus did they ensure that TVA would deal 
not with one resource but with all the resources of the watershed as 
an integrated whole. 

The Valley's forests cover 14,000,000 acres, or 54 per cent of the 
land area. In some mountain counties as much as 90 per cent of the 
land is still in forest. These forests for the most part are privately 
owned. Only 18 per cent are in national forests and parks and other 
forms of public ownership: TVA owns only about 218,500 acres. The 
size of individual private holdings is relatively small, 99 per cent being 
in ownerships of less than 500 acres. The industries that use wood as 
a raw material own only about five per cent. The forests of the Valley 
are predominantly hardwood. Oaks and hickories make up almost 
half of the total forest stand. Southern pines and red cedar are the 
most important softwoods. 

Some 5,000 sawmills and 1,500 other wood-using plants draw their 
raw material from Valley forests. These industries provide annually 
about 11,000,000 man-days of employment. Their products are valued 
at $355,000,000 a year. According to the 1947 census of manufactures, 
the forest products industry stands fourth in importance among all 
industries of the region, being surpassed only by textiles, chemicals, 
and primary metal products. 

To these tangible and immediate forest values must be added 
the intangible — watershed protection, recreation, wildlife, and scenic 
benefits. All of these are directly dependent on forests to a greater or 
lesser degree. In this region of steep slopes and heavy rainfall, forests 


178 Twenty Years of TVA 

surpass all other types of vegetative cover as a protector of the soil. 
They are an important factor in water control in that they condition 
the soil, increasing its capacity to absorb and hold moisture. This in 
turn means greater underground storage and less erosion. Most wild- 
life depends on the forest for food and shelter. Fish are benefited 
when streams are kept clear and free of silt, and when their flow is 
held steady throughout the year. The scenic and recreational values 
of forest land are quite apparent. Camping, hiking, and picnicking 
without a forest background would be small pleasure indeed. 

It is apparent that the Valley's forests are among its most valuable 
resources, in terms both of forest products and of contributions to 
related activities; yet the products of the forests, whether tangible or 
intangible, presently achieve only a fraction of their potential value. 
The average forest acre could produce three times as much wood as 
at present; increased supplies of better quality wood and the manu- 
facture of more finished goods in the region could push income be- 
yond $1,000,000,000. Full-time jobs in the woods and in wood-using 
industries could be increased from the present 40,000 to 200,000. And 
along with the increase in dollar values could come a proportional 
increase in the indirect values. There is a vast gulf between what the 
Tennessee Valley's forests produce and what they are capable of pro- 
ducing. It is the mission of TVA's Division of Forestry Relations to 
assist in closing that gap. 

Forestry Policy 

The TVA Board of Directors employed a chief forester 
in August, 1933, two months after its first meeting on June 16. He 
was authorized to develop plans for erosion control, reforestation, 
and forest improvement, and to employ necessary personnel and be- 
gin operations. No formal forest development policy was set forth at 
that time; this was not to come until four years later. 

In the beginning, the TVA Division of Forestry Relations in many 
ways resembled the United States Forest Service. The policy developed 
over the years by that agency was followed closely. Briefly stated, it 
was this. Forestry problems have to do primarily with trees and can 
therefore be solved by technicians trained in the botanical sciences 
and the art of forest management. The federal and state governments 
should own and manage large blocks of forest land in the interest of 
timber production and watershed protection. The management of 
privately owned forests should be subject to public regulation. 

In accordance with this pattern, the TVA forestry program 

Forestry 179 

emerged as a public action program. Labor was supplied by the Ci- 
vilian Conservation Corps. The landowner contributed little more 
than permission for the CCC to control erosion or plant trees on his 
land. TVA foresters began investigating the forest land of the Valley 
with the expressed purpose of determining how much of it should be 
taken out of private ownership. By 1937 TVA's chief forester was 
ready to propose that public forests in the Valley be increased from 
the then twelve per cent of the total to almost fifty per cent. Most of 
this public forest domain was to be administered by the Forest Service 
as national forests, but as much as half a million acres was to be re- 
tained by TVA as a demonstration of scientific forest management 
and an experiment in the development of forest-supported com- 

The TVA Board was not sympathetic to this proposal. The mem- 
bers of the Board leaned strongly toward placing responsibility for 
resource development on those who owned or used the resources. Pub- 
lic assistance, they felt, should be limited to supplying basic informa- 
tion about the forest resource and demonstrating methods of sound 
forest management. In other words, they favored an educational ap- 
proach to forest development, one that would enlist the co-operative 
efforts of all forestry agencies, forest landowners, and forest indus- 
tries. They did not feel the need for additional large-scale public 
acquisition or regulatory action. 

In 1937 the Board adopted a resolution on forestry policy and pro- 
cedures, and the following year employed a new chief forester. That 
first statement of forest policy declared that the duties of the Forestry 
Division should include responsibility for: 

1. Surveys in co-operation with other divisions of TVA and with out- 
side agencies to determine the character and value of the forest 
and water resources of the Valley for timber production, watershed 
protection, wildlife, range, and other forest uses; 

2. Studies to determine how use of electric power may be promoted 
by the development of forest industries; 

3. Plans for the management of forest lands owned by TVA; 

4. Investigations to determine the relationship of forests to water 
control, including studies of the best methods of erosion control, 
forestation, producing forest planting stock, forest fire prevention, 
rehabilitation of fisheries and wildlife resources, forest manage- 
ment, and utilization and marketing of forest products; 

5. Co-operative arrangements with national, state, and local agencies 
and with individual landowners and associations of landowners in 

180 Twenty Years of TVA 

achieving improved forestry practices in the interest of general 
watershed protection; 

6. Plans and technical supervision for the CCC forestry camps as- 
signed to TVA; 

7. Operation of two forest tree nurseries; 

8. Co-operation with appropriate departments in planning a program 
of fisheries and wildlife development; and 

9. Studies and experiments to discover and develop special strains 
and varieties of improved forest trees, and to demonstrate and en- 
courage their use. 

In 1941 this basic policy statement was supplemented by a direc- 
tive on procedures to this effect: 

1. The activities of the division shall be conducted wherever possible 
through co-operative relationships in such a manner that the func- 
tions of the several co-operating agencies may be strengthened and 

2. The Authority is concerned with forest and wildlife problems on 
farms and farm woodlands, as well as on large tracts of forest not 
used or owned by farmers. The division is authorized to consider 
various approaches, including direct action by individual land- 
owners, co-operative group action, and various measures of public 

With minor changes and some important shifts in program em- 
phasis, this policy is still in force. As with all of TVA's resource de- 
velopment work, the approach to forest development is an experi- 
ment in education, involving the owners of forest land, the industries 
that manufacture wood products, and all the people who share in the 
social and economic benefits stemming from forest land. This is not 
a new approach to the problem, of course, but it has been more con- 
centrated and sustained in TVA practice than ever before. 

Forestry Programs 

The Tennessee Valley has four basic forestry needs. 
These are not unique; most of the southern states have the same 
needs. Stated in terms of objectives, these needs are (1) adequate pro- 
tection from fire, grazing, insects, and disease; (2) reforestation of all 
potential forest land not adequately stocked with trees of commercially 
valuable species; (3) adoption of management practices that will 
build up timber yield to the limit of soil productivity and maintain 

Forestry 181 

production at that level; (4) integration of harvesting and utilization 
processes so that waste is reduced to a minimum and employment 
and income are increased to the maximum. 

Forest Protection 

In 1933 less than half of the forest land in the Valley 
got any protection from fire, and none of the protection that was given 
could be considered adequate. Forestry budgets for the seven Valley 
states totaled little more than $500,000 and supported only 36 foresters. 
In 1934 fire burned over almost three per cent of the 7,000,000 acres 
of forest land under protection. There are no records for the other 
7,000,000 acres, but it is probably safe to estimate that on this un- 
protected area the burn was nearer 10 per cent than three per cent. 
Conservative estimates place the annual burn in those days at some- 
thing over 750,000 acres a year- — perhaps as much as a million acres. 

In this atmosphere, TVA decided that its assistance in fire control 
would be most effective in the field of fire prevention. The states 
were doing very little in that direction and they were more than will- 
ing to enter into co-operative projects with TVA designed to build 
up public sentiment against forest fires. First emphasis was on sus- 
tained motion picture programs in selected areas. Once a month for 
six or eight months a TVA forester would visit the same community 
with a new movie, stressing the damage done by forest fires and urging 
more co-operation with the state protection forces. By 1947 there had 
been close to 6,500 of these meetings with total attendance of 

As public support for the state agencies became stronger, TVA 
helped them expand their protection boundaries. TVA foresters 
talked with county officials and persuaded them to appropriate the 
funds that were required before a protection organization could be 
set up by the state. They helped locate fire lookout towers and pro- 
moted co-operation between states in locating and reporting fires. 
They analyzed the fire problem in high-hazard areas and recom- 
mended ways and means for coping with it. They helped the state 
foresters get started in the business of measuring and predicting fire 

More recently, TVA has concentrated on co-operative fire con- 
trol projects in specific areas — a county, a group of counties, or a sin- 
gle watershed. Here it provides the additional financial and technical 
aid the states need to do a specific fire control job, with major empha- 
sis on prevention. The projects run five years or less. Nine of them to 

182 Twenty Years of TVA 

date have covered about fifty counties in six states. One such project 
in the fifteen Valley counties of North Carolina will serve as an ex- 
ample. It began in 1947 and ended in 1952. The forest area involved 
is 2,710,000 acres — 1,688,000 acres privately owned, the remainder in 
national forests and parks. The terrain is rugged. Several major tribu- 
taries of the Tennessee River have their headwaters here. 

Details of the joint project were worked out in the field by repre- 
sentatives of TVA and the North Carolina Division of Forestry. 
These were the objectives: 

1. To extend adequate fire protection to all private forest lands in 
the 15 counties (some counties had never had any protection); 

2. To demonstrate how intensive efforts, with emphasis on preven- 
tion, could reduce annual fire loss to a normal business risk (about 
one-fourth of one per cent); 

3. To provide protection for TVA lands in North Carolina; 

4. To determine cost and time required to secure the quality of pro- 
tection desired; and 

5. To test the type of organization in use for possible application 

The project functioned under the supervision of the state district 
foresters in the area. Budgets ranged from $103,023 in 1947-48 to 
$121,234 in 1951-52, with TVA's contribution dropping from $20,000 
the first year to $10,000 the last. A great deal of the state's effort went 
into training fire fighters, weeding out incompetent individuals, and 
hiring new men. Two new lookout towers were built to furnish ade- 
quate detection. Radio communications replaced telephones. Fire 
prevention activities were intensified and maintained throughout the 
life of the project. All fires were fully investigated, and persons sus- 
pected of setting fires were brought to trial. 

For the five years prior to 1947, about three per cent of the forest 
land in the 15 counties burned each year. After five years the average 
annual burn was reduced to 0.22 per cent. Size of the average fire de- 
creased from fifty acres to eleven acres. Total area burned dropped 
from an average of 16,000 acres a year to 3,600 acres. Causes of fires 
remain about the same: a third of them are still caused by brush and 
debris burners; over twenty per cent are incendiary; smokers are re- 
sponsible for seventeen per cent, campers and hunters twelve per 

As for over-all progress in fire control, the Valley has traveled far 
but still has a long way to go. State fire control forces now cover 85 
per cent of the private forest land (all public lands receive protec- 

Forestry 183 

tion). This means that about 2,000,000 acres still have no protection 
whatever. Furthermore the protection now afforded is adequate or 
near adequate on only about half of the area protected. 


In the late thirties and early forties the Civilian Con- 
servation Corps was available for work in reforestation, and the CCC 
boys did the bulk of the tree planting. A landowner was required to 
do little more than give his permission and protect the plantation 
after it was established. This public labor force went out of existence 
in 1942, however, and from then on the landowners have had to do 
the whole tree-planting job. 

Early in the reforestation program, TVA developed co-operative 
working relationships with the state extension services. By the terms of 
the agreement, county agents helped locate the areas in need of ero- 
sion control treatment and tree planting. They were also active in 
signing up landowners who wanted such work done on their farms. 
Later, as the state forestry agencies found the time and means to ex- 
pand their activities, they joined in the reforestation program. TVA 
welcomed this development, since it had always recognized the 
state forester as the forestry leader of the state. The old agreements 
with the extension services were modified to include all three agencies. 

There is a reforestation project in every Tennessee Valley state. 
The state forester is the project leader and all applications for seed- 
lings must be approved by him or one of his representatives. Farmers 
have long been in the habit of going to their county agents for help, 
however, and that relationship was maintained. All farmer applica- 
tions for seedlings come to the state forestry personnel through the 
county agents. Thus the agent's agricultural training is utilized to 
help determine land use, for he helps the landowner decide which 
areas should be planted. TVA produces the seedlings in two large 
nurseries, helps to keep the project running smoothly, and evaluates 
the results of the planting project periodically. All three agencies join 
in the educational effort required to promote tree planting. 

No charge is made for the seedlings. Here TVA broke with the 
accepted practice of other public agencies by providing seedlings free 
for reforestation purposes. Various states have been in the business 
of producing forest tree seedlings for years. They are assisted finan- 
cially with federal funds allotted under the provisions of the Clarke- 
McNary Act. In all cases they make a charge for seedlings, usually 
$2 or $3 a thousand. TVA felt that this might be one of the bottlenecks 

184 Twenty Years of TVA 

that was slowing down progress. It believed that the public benefits 
to be derived from reforestation warranted a public investment. Fur- 
thermore, it was convinced that many of those whose lands most need 
attention are least able to buy seedlings. A possible source of trouble 
was obviated through an agreement with the state foresters by which 
all TVA's free seedlings would be used inside the Tennessee River 
watershed, with the states' seedlings being reserved for sale outside. 

About 200,000 acres of eroded and idle land in the Valley have 
been reforested to date. The rate of planting is now about 15,000 
acres a year. At this rate it will take about 100 years to reforest the 
1,500,000 acres still requiring it. It is hoped that the program can be 
speeded up, and there is some indication that it can be. Back in CCC 
days the number of individual landowners involved never exceeded 
3,000. In 1950 the number was 6,600. Each planted an average of 
2 1/4 acres. 

It is TVA's experience that, notwithstanding an initial inertia, 
landowners will plant trees when they have the time to do it. During 
the war years tree planting fell off to almost nothing. Likewise, when 
the national production machine is in high gear, farmers are com- 
pletely engrossed in food production or working part-time in industry 
and there is no time for such things as planting trees. Here as else- 
where the attitude appears to prevail that conservation is something 
to be practiced when there is nothing more profitable to do. The need 
for education remains great. 


In the early days of TVA, fire control, erosion control, 
and reforestation were the urgent problems. First things were started 
first. But in 1942, with the increased demand for wood resulting from 
United States entry into World War II, TVA began setting up forest 
management demonstrations. There were two immediate objectives: 
to teach methods and at the same time to help out in timber produc- 
tion. Demonstrations on farms were set up in co-operation with the 
state extension services, with a county agent or his assistant actively 
participating in each one. Where a farmer was not involved, the 
demonstration was set up in co-operation with the state forestry 
agency. There are now about 260 of these forest management dem- 
onstrations available for study by forest landowners. 

But here again, the time involved in setting up the demonstration 
and waiting for it to bear fruit as a showpiece prompted TVA to 
adopt supplementary methods. The most recent device is the timber- 

Forestry 185 

harvesting demonstration. This is a one-day meeting in the woods for 
landowners and timber operators. It is designed to show the principles 
of selective cutting, and how and where to market forest products. It 
is also an effective scheme for getting forestry agencies together in a 
united forest development program. One such recent demonstration 
in Tennessee brought together these groups, all taking an active part: 
Tennessee Valley Authority, Soil Conservation Service, Tennessee Di- 
vision of Forestry, Tennessee Extension Service, a private forestry 
consulting firm, a lumber company, and of course the property owner. 
Two other organizations also took part but to a lesser degree than the 
others: Forest Farmers Association and Keep Tennessee Green As- 

These demonstrations require a great deal of time and effort. 
First of all a suitable area and a landowner who is willing to co- 
operate must be found. Then the trees on about two acres are marked 
for harvest. On one acre the trees are cut; the products are sold but 
not removed from the area. Those attending the demonstration thus 
see two areas that were originally very much alike. They see what 
came off one of these areas, and the industry people who bought 
the products are there to tell why they bought them and what they 
paid for them. On the other area they see the kind of trees that were 
cut, and they hear an explanation of why some were cut and why 
some were left to grow. 

TVA carries on some investigative work in forest management. 
This concerns different methods of harvest cuttings, thinning of pine 
stands, fertilization as an aid to timber production, development of 
improved trees, etc. Such studies are conducted co-operatively with 
the Forest Service experiment stations, or in some cases with state 
agricultural experiment stations. TVA is a working member of a 
regional research team and is now recognized as a regional clearing- 
house for forest resource information of all kinds. 

As with all programs involving public education, difficulty is al- 
ways encountered in measuring progress. There are some, indeed, who 
claim the problem cannot be solved through education, that it can be 
solved only through legislation. The Forest Service has been of this 
persuasion ever since its creation at the turn of the century. Several 
states now have statutes that purport to control the actions of an in- 
dividual landowner when he harvests his timber, but in most cases 
these laws are permissive rather than compulsory. They set up the 
machinery for state aid to forest landowners but do not compel its use. 

TVA remains of the opinion that education is the most effective 
tool available to the public administrator. In his American Forest 

186 Twenty Years of TVA 

Policy, Luther Gulick speaks of education as ". . . an effort to ab- 
sorb an understanding of the ideas and needs of the common man 
through working with him, and through drawing him into the work 
of planning, and doing, and enforcing." The fruits of education are 
more than individual compliance through understanding; they extend 
also to interchange of knowledge, and to active citizen involvement 
in programs. The gains achieved through voluntary co-operation 
seem to TVA greatly to outweigh the disadvantages implicit in the 
processes of education as a tool of administration. 


Lumber production in the Tennessee Valley hit a peak 
of 1,500,000,000 board feet in 1909. Average annual production now 
is just under 1,000,000,000 board feet. In addition to lumber, the 
Valley also produces a variety of other wood products: pulp and pa- 
per, veneer, furniture, railway ties, chemicals, handles, barrels, boxes, 
crates, etc. Yet there is in the forests a tremendous volume of low- 
quality hardwood which is suitable for none of these products. This 
may be the one biggest obstacle to forest development. Here is an 
abundant raw material, one that should be harvested because it will 
not increase further in value, one that is occupying growing space 
that should be occupied by more valuable trees; but this product 
will not, in most cases, pay its way out of the woods. There is no 
market for it, except locally around the one wood distillation plant 
in the Valley. 

TVA has made two attempts to create a market for this kind of 
wood. First it conducted an experiment with laminated lumber. The 
idea was to cut wood into relatively small pieces and glue them to- 
gether in a continuous glue press. Design of the press was contracted 
out to the Georgia School of Technology. One was built and operated 
for about three years in a pilot plant setup. The product was a board 
12 inches wide, 2 % 2 inch thick, and continuous in length, designed 
to be used as flooring. Laboratory and service tests proved the product 
to be a satisfactory substitute for conventional strip flooring. At this 
point the results of the study were made available to industry. Sev- 
eral companies have expressed interest in the idea but so far none 
has gone into production. 

The second attempt was an experiment in the manufacture of 
molasses from wood. This was a joint project with the U. S. Forest 
Products Laboratory, and represented an extension of work that 

Forestry 187 

agency had been doing for several years. Here again a pilot plant was 
set up and operated for three years. The 10,000 gallons of molasses 
produced during this period was used by agricultural experiment sta- 
tions in the South for livestock feeding tests. Economic analysis of 
the pilot plant operations shows that wood molasses could have com- 
peted with blackstrap molasses on the open market during eight of 
the past ten years. Obviously, such an economic picture is not very 
attractive to private industry. TVA plans to test other hydrolyzing 
agents in the hope of developing marketable by-products which can 
absorb part of the production cost. In the meantime the process is 
available for emergency use if present commercial facilities for the 
production of alcohol become inadequate. This was the case during 
the last war when the government financed a large plant on the 
West Coast to make alcohol from wood. The jump from laboratory 
tests to full-scale production was too great, however, and the plant 
never operated successfully. 

Another obstacle that stands in the way of forest development 
is the lack of integration in the forest products industry. The sawmill 
man wants only sawlogs, the pulpwood dealer will buy only pulp- 
wood, the stave buyer is interested only in top grade white oak that 
will make staves for whisky barrels. What is desperately needed is 
some sort of marketing service that will handle in one operation all 
of the wood to be harvested from a tract of timber. This is one of the 
ideas TVA is trying to get across in its timber-harvesting demonstra- 
tions. There is usually a one best, most profitable use for each por- 
tion of each tree. Only by harvesting everything in one operation can 
one hope to realize the most profit and eliminate the waste that is in- 
evitable when several operators work over the same area in succes- 

Between 4,000 and 5,000 sawmills operate in the Tennessee Valley. 
A single county may have as many as fifty or sixty. In 1950 TVA made 
a study of these mills to find out how well they were managed. Only 
about fifteen per cent operated under anything approaching sound 
business principles. Three-fourths of them were using worn-out or 
antiquated equipment; these accounted for only twenty per cent of 
the lumber produced. The study indicated that production costs 
could be cut by an average of $3.50 per thousand board feet, and that 
profits could be increased by more than five per cent. The results of 
this study are being presented to sawmill men through a series of con- 
ferences arranged and sponsored by the forestry schools and other 
agencies in the region. The meetings have been well attended. A com- 

188 Twenty Years of TVA 

panion study on the logging end of the sawmill business is now in 
progress. Its results will be passed on to industry as soon as they are 

TVA has been active in the wood preservation field for several 
reasons. The increased emphasis on livestock farming in the Valley 
has created a need for much more fencing. Naturally durable woods 
are scarce and expensive; hence TVA seeks to develop simple treat- 
ing methods that will make the abundant nondurable woods accept- 
able as fence posts. Second, thousands of acres of planted pine trees 
need to be thinned at about the time they reach post size. With a 
market for small-size pine, the owner of a plantation or natural pine 
stand can be induced to thin it and thus maintain rapid growth. TVA 
also desired to lengthen the service life of wood and thus conserve the 
supply and decrease replacement costs. Finally, TVA's interest in 
wood preservation provided an opportunity to get agricultural ex- 
periment stations involved in a forestry project. 

The problem was attacked through a regional project that in- 
cludes the land-grant colleges in six states, in addition to TVA. All 
operate under the same work plan, treating posts by the same meth- 
ods and putting them in service tests at widely scattered geographic 
locations. Equipment has been designed for peeling posts and treat- 
ing them; satisfactory treating techniques have been worked out; 
treatability of various species has been determined; pilot plant op- 
erations have given some indication of treating costs. As a result of 
this project, many small treating plants are now operating in the 
Valley. Many farmers, indeed, are treating posts on the farm. One 
large supplier has set up procurement facilities in the western part 
of the Valley and expects to purchase 600,000 pine posts a year, 
mostly from farmers in the Tennessee Valley. 

Other investigations in the utilization field have involved the 
production of oak slabs, design of a small electrically heated lumber 
dry kiln, extraction of essential oils from pine and cedar foliage, and 
manufacture of plastics from ground-up walnut shells. 


Based on the experiences of the past twenty years, some 
predictions for the future may be ventured. First, it seems reasonable 
to suppose that the seven Valley states can achieve adequate protec- 
tion of all forest lands within the next ten years. This means an aver- 
age annual fire loss so small (perhaps 0.25 per cent) that fire will 
constitute no more than an average business risk, and that forest fire 

Forestry 189 

insurance can be made available at economical rates. Protection from 
cattle grazing will take longer and will depend on the support given 
by agricultural agencies. Even so, it would appear that the forest land 
being grazed can be cut from 12 per cent to 5 per cent by 1963. 

The rate of reforestation will be doubled within the next five years 
and maintained at about 30,000 acres a year. At this rate, the tree- 
planting job as it is visualized today can be completed in fifty years. 
Within ten years practically all of the large forest landowners (10,000 
acres and larger) will be managing their properties for sustained maxi- 
mum timber production. Also by that time the key to sustained pro- 
duction on small forest holdings (500 acres and less) should have 
been discovered. 

Ten years from now forest industries will be better geared to the 
resource. Most of them will be producing a range of products rather 
than one single item. They will be promoting and practicing sus- 
tained-yield harvesting. From what has been learned on hundreds of 
forest management demonstrations, it is clear that near-maximum 
timber production for the Valley can be realized in forty years. 
Lumber production by that time should hit 3,000,000,000 board feet 
a year, with pulpwood and other primary forest products increased 
in proportion. The Valley can look forward to a forest products in- 
dustry whose products will swell the regional income by more than 
$1,000,000,000 a year. 

Forest soils will be protected from erosion, surface runoff will be 
reduced, recreational opportunities will be enhanced, game and fish 
habitats will be improved. These by-products of thrifty, productive 
forests cannot be valued in dollars and cents, but their constructive 
impact on the region may be as great as or greater than marketable 
wood products. The Valley's forests will one day be its most valuable 
natural resource next to land and water. 

Fish and Game Resources 

One branch of the TVA Division of Forestry Relations 
is concerned with fish and game resources. The name "Fish and 
Game Branch" may be somewhat misleading in that it does not com- 
pare with state fish and game agencies. It is similar in a few respects 
but dissimilar in many. TVA's fish and game activities are predomi- 
nantly investigative, stemming as they do from concern over the 
changes in fish and wildlife habitat brought about by impoundment 
of the rivers. The old Tennessee River was a flowing stream, varying 
greatly from section to section and from season to season, but still a 

190 Twenty Years of TVA 

flowing stream. Now it is a chain of practically still-water lakes; water 
depth is greatly increased; surface area is 100 times greater; the shore- 
line of all TVA reservoirs is now over 10,000 miles. Seven states are 
involved and their interests require integration. 

There was some evidence to indicate that fish might not thrive 
in these impounded waters. Fish biologists and fishermen generally 
were of the opinion that variations in water level interfered with fish 
production, and that fluctuating reservoirs were destined to become 
"biological deserts." It was this belief that prompted TVA in the 
early days to build two fish hatcheries and several fish-rearing ponds. 
With the U. S. Fish and Wildlife Service operating the hatcheries, 
TVA prepared to embark on a large-scale fish-stocking program. 

But at the same time, the agency began studying the new reservoirs 
in an effort to find out what actually happened. TVA experts made 
detailed limnological studies to determine the chemical and organic 
composition of impounded waters. They made fish population 
studies, harvesting studies, growth studies, food studies, before-and- 
after-impoundment studies. As the results of these researches were 
analyzed and pieced together, it became increasingly obvious that im- 
poundment meant more and better fishing. Game fish were produc- 
ing satisfactorily in the reservoirs, growing rapidly, and successfully 
eluding the anglers' lures. Whereas TVA had been worrying about 
maintaining fish populations, actually here was a resource that was 
not being utilized adequately. Fish grow rapidly in these waters and 
apparently die young: it is unusual to find one much over five years 
old. Extensive tagging studies indicated that only a small percentage 
of the available fish crop was being harvested — in most cases under 
ten per cent, rarely over twenty. This meant that unless a fish was 
caught by an angler within five years of its spawning, it probably died 
a natural death and was lost as sport and food. 

One fish hatchery was closed down. The U. S. Fish and Wildlife 
Service continued to use the other one to produce fish for other 
waters. Since about 1942 there has been no stocking of TVA lakes, 
except where careful study indicated the desirability of introducing a 
new species. TVA recommended to the state conservation depart- 
ments that closed seasons be eliminated on the reservoirs, and that 
commercial fishermen be allowed to use nets. Tennessee was the first 
state to do away with the closed season. All other Valley states except 
Virginia have followed suit so that now one can fish in TVA lakes any 
time during the year. This action doubled the sport fish catch on all 
lakes where records are available. Still most of the fish die a natural 
death and are wasted. The highest harvesting percentage on record 

Forestry 191 

is forty, but the average on six reservoirs where fish have been tagged 
is still only about fifteen per cent. 

Alabama legalized the use of nets by commercial fishermen. As a 
result, the annual catch of non-game fish in the four TVA reservoirs 
in Alabama increased steadily from 800,000 pounds in 1944 to 1,890,000 
pounds in 1952. The total commercial fish harvest in the Valley 
is probably close to 3,000,000 pounds annually, its value over $750,000. 
Added to this is the 10,000 tons of mussel shells taken from TVA 
reservoirs each year. This runs the income of commercial fishermen 
to well over $1,000,000 a year. Sport fishermen take an estimated 
7,000,000 pounds of fish from TVA lakes each year. The value of the 
catch is hard to estimate; but when account is taken of the parapher- 
nalia the average fisherman uses, his car travel to and from the lake, 
lodging and meals, and boat and motor rental, $10,000,000 appears 
to be a very conservative estimate. 

TVA continues to collect information on the management of fish 
in impounded waters. Where little or nothing was known twenty years 
ago about producing fish in fluctuating reservoirs, a great deal of 
valuable information is now available, and more is being added all 
the time. 

The outlook for waterfowl development is not so promising as 
for fisheries development. Storage reservoirs offer only limited wild- 
fowl opportunities because they are drawn down for flood control 
when the ducks and geese are migrating through the area. On some 
of the mainstream reservoirs, however, there are opportunities, and 
advantage has been taken of them. Almost 100,000 acres of land and 
water on Kentucky and Wheeler reservoirs have been transferred to 
the U. S. Fish and Wildlife Service for use as waterfowl refuges. An- 
other 41,000 acres are operated as refuges and wildlife management 
areas by state conservation departments. Additional areas are leased 
by the states for the production of waterfowl food. One unexpected 
benefit of the dewatering projects designed for malaria control is their 
suitability for waterfowl food production. While these areas are 
pumped dry in the spring and summer, waterfowl food crops are 
planted. They mature and are flooded in the fall by normal water- 
flow, making almost ideal conditions for ducks. Such development 
work as this is largely responsible for the hundreds of thousands of 
waterfowl that now branch off the Mississippi flyway on their south- 
ward migration to spend some time on TVA reservoirs. Many thou- 
sands are spending the winter in the Valley instead of going on farther 
south. Hiwassee Island in Chickamauga Reservoir, about midway be- 
tween Knoxville and Chattanooga, provides an interesting example. 

192 Twenty Years of TVA 

In 1940, when this island was set up as a state waterfowl refuge, 
twenty Canada geese spent the winter there. Now the wintering popu- 
lation is in excess of 7,000 and the number keeps increasing year by 

The waterfowl field provides a good example of how TVA exerts 
an influence on resource development. TVA did none of the develop- 
ment work itself. True, it did create the conditions that made the 
work possible, but the reservoirs and dewatering projects in them- 
selves were not enough. The Authority made land available for 
refuges and the production of waterfowl food crops. It showed that 
benefits for waterfowl can be achieved without interfering with flood 
control, navigation, and power production. It proved that malaria 
control operations need not conflict with wildlife development. It 
demonstrated that several public agencies with quite different respon- 
sibilities can co-operate effectively in the pursuit of a common pro- 
gram. And in both waterfowl and fisheries programs TVA convinced 
the state fish and game authorities that their programs must be 
grounded on adequate scientific fact. 

Chapter i 2 

By O. M. Derryberry, M.D 

Xhat health is nowhere mentioned in the TVA Act 
immediately sets up certain presumptions. Health was apparently not 
a basic consideration in the minds of those responsible for creating 
the TVA and is not reckoned a primary program field to this day; 
nonetheless, TVA, recognizing the necessity to adopt a health program, 
has been free of stipulation and restriction in defining that program 
to meet clearly implied statutory requirements. Evidence of the re- 
sulting flexibility is found in the early administrative approach to 
health interests. In the beginning, a section to provide employee health 
and medical services was established in the Division of Personnel; an- 
other section handling general health activities was placed in the Social 
and Economic Division (because such activities involved planning and 
research); and a Director of Health gave supervision to both sections 
even though they were in separate organizational units. It was not 
until the first of the year 1936 that the Division of Health and Safety 
was organized. 

The administrative decision to bring all its health interests to- 
gether in a single division reflects the recognition by TVA man- 
agement of values inherent in co-ordinating all of these interests at a 
single point. The TVA system of management provides a convenient 
and effective framework for co-ordination of responsibility, but it was 
the spirit of co-operation as much as the letter of formal administra- 
tive delegation which made successful internal relationships possible. 
For example, in malaria control the scope of activity from program 
planning and development through program application touches 
upon the areas of structural design, construction, water control plan- 
ning, power, navigation, flood control, wildlife and recreation, and 
reservoir management. Clearly the reconciliation of these varied and 
potentially conflicting interests repeatedly required discriminating 
and co-ordinated evaluation of alternative administrative actions. It 

x 93 

194 Twenty Years of TVA 

was reasoned that nothing short of a unified Division of Health and 
Safety would prove adequate to the need. 

In general, TVA's activities in the field of health are related to 
two principal interests, one having to do with the health of em- 
ployees, the other with the environmental and economic changes 
which have an impact on the general public health. The former con- 
cerns chiefly the story of what TVA does to protect the health of em- 
ployees while at work. In its experience in providing medical service, 
frequently under frontier conditions, TVA is unique among civilian 
federal agencies. The TVA construction program often has resulted 
in concentration of large numbers of employees and their families 
in isolated areas where facilities for health protection were lacking 
entirely or were grossly inadequate. TVA's early decision to carry 
out its construction program by force account was influential in the 
agency's establishing its own industrial medical service and working 
out methods of collaboration with the Bureau of Employees' Com- 
pensation, which has the basic responsibility for administering the 
federal employees' compensation law. TVA set up health offices at 
points of concentration of large numbers of employees and, in some 
isolated construction areas, built and staffed small hospitals. Employee 
health service emphasized preventive measures such as initial and 
periodic medical examinations, health education, immunization 
against communicable diseases, and prompt treatment of occupa- 
tional injuries. In more isolated areas TVA employees were offered 
complete medical care, inasmuch as the services of established hospi- 
tals and physicians were not available. Such extensive services were, 
of course, temporary and were developed or demobilized concurrently 
with waxing or waning construction activities. 

A companion piece to employee medical service was a program 
of safety which TVA early built into all its activities. Directed toward 
the prevention of accidents, attention was concentrated on influenc- 
ing the attitudes of workers, for it was known that behavioral ele- 
ments are principal factors in most accidents by far. Results of this 
program may be judged by the steady decline over the years from an 
accident frequency of 62.26 per million man-hours in 1935 to 4.5 in 


TVA's impact on health in the Tennessee Valley is not to be meas- 
ured solely, however, in terms of its contributions to the health and 
safety of its own employees. One thinks also of the second category 
of interests — the environmental and economic changes in the region 
which have affected health, and of TVA's influence on those changes 
— in appraising the Authority's action in the field of health. In this 

Health 195 

general area TVA's activities have been many and varied. For present 
purposes they may be exemplified by TVA's work in malaria control 
and stream pollution control. 

Malaria Control 

Long before TVA was created, effective state health de- 
partments and many local ones existed in much of the Tennessee 
Valley region. A forward-moving federal health agency, the U. S. Pub- 
lic Health Service, was also functioning in this region as in other 
parts of the country. From the beginning, TVA adopted the practice 
of co-operating with the Public Health Service, with the states and 
their subdivisions and agencies, and with other existing organizations 
in working out plans to deal with its health interests. TVA also early 
adopted a policy to use regulations of the states as a guide in estab- 
lishing standards of health and environmental sanitation pertaining 
to TVA operations. 

Over twenty years before TVA, it was clearly demonstrated that 
unless controls were applied, impoundment of water in the south- 
eastern United States resulted in prolific propagation of Anopheles 
quadrimaculatus, the malaria-carrying mosquito. Private power com- 
panies had learned this lesson at considerable expense and incon- 
venience and were required by state health authority to empty and 
prepare properly several single-purpose reservoirs. Because they had 
failed to deal adequately with the cause, serious outbreaks of malaria 
occurred around their impoundages. Shortly after the creation of TVA, 
an outstanding sanitary engineer, Mr. J. A. LePrince, wrote to the 
U. S. Public Health Service urging that attention be given to the 
malaria control potential associated with construction of the Cove 
Creek (Norris) Dam. In his letter he said: 

You will remember that when the Wilson Dam was constructed the 
Memphis Office was absolutely unable to get the officer in charge of con- 
struction to take precautions against production of anophelines and the 
increase of malaria in the entire territory surrounding the lake. We ham- 
mered at the subject for about eighteen months. The result was a most 
successful failure, and the anopheles ran the construction gangs out of 
camp, with dozens and dozens of anopheles per tent occupied. . . . 

I do not know who is to have charge of this [TVA] work, but it would be 
a crime to have the same unnecessary high prevalence of malaria which 
was allowed to exist when Muscle Shoals Dam Lake was created. Then 
there was family after family down with malaria and it was very hard to 

196 Twenty Years of TVA 

find a house without new cases during the first season the water was 
up. . . . 

In order to get practical action taken on the Muscle Shoals Lake we had 
to correspond with the Federal Power Commission and Army Engineers 
to the extent of about five pounds of letters. I hope our efforts to get eco- 
nomic results will be more successful in the case of the Cove Dam 
Basin. . . . 

TVA elected to go about its treatment of impounded water 
projects in a manner different from that which Mr. LePrince had ob- 
served at Muscle Shoals before TVA was created. Its basic philosophy 
began to emerge in a letter, written shortly after the Wheeler Dam 
project was authorized and approved by the TVA Board of Directors, 
to the State Health Officer of Alabama. The letter read in part: 

It is the aim and purpose of the Tennessee Valley Authority to improve 
conditions in the Valley — not to create or maintain a health menace. We 
know that your organization has had the widest experience in the control 
of malaria on impounded reservoirs, and your co-operation and advice has 
been of inestimable value to the Authority. Through our Health and 
Medical Sections we have had most cordial relations with your depart- 
ment, and it is with a view of strengthening these relations that this pro- 
gram of work done, under way, and proposed is being submitted. It can 
be accepted as a definite policy of the Tennessee Valley Authority that 
every possible effort will be made to maintain effective malaria control on 
its impounded reservoirs in Alabama, in co-operation with and based 
upon the advice of the State Department of Public Health. 

While its own staff was being assembled, TVA sought the advice 
of the U. S. Public Health Service, convened a Board of Consultants 
on Malaria Control, and conferred with officials of the Alabama State 
Health Department. Based upon the advice of all these groups, and 
using state regulations governing the impoundment of water as a 
guide, TVA began to develop the first known totally integrated ma- 
laria control program on multipurpose reservoirs. In this develop- 
ment malaria control on TVA impoundments was not considered as 
a humanitarian project, but as an essential part of the program of 
water control to which TVA was committed. Thus the question of 
the state's authority to enforce its regulations on an agency of the 
federal government did not arise to create dissension. TVA did not 
wish to be placed in a position of neglecting to do that which was 
required of private individuals or corporations, but early established 
a policy of setting a standard, rather than merely conforming to mini- 
mum requirements. No firmer evidence that malaria control was con- 

Health i 97 

sidered an essential part of the dam construction program could be 
had than the decision to raise the top of the gates on Wheeler Dam 
one foot so as to make provision for water level management in 
the interest of malaria control. A letter from the Chairman of the 
TVA Board of Directors to the State Health Officer of Alabama put 
this decision in these words: 

As a result of these conferences, the design of Wheeler Dam has been 
modified to provide fluctuation of water level in order to make effective 
mosquito control possible, and the clearing of the reservoir site is being 
done in a manner recommended by your department. . . . 

Another statement of the same basic decision read thus: 

Since the fluctuation of water level is of basic importance in the control of 
Anopheles quadrimaculatus, the maximum normal pool level above the 
Wheeler Dam will be raised from Elevation 555 as originally proposed, 
to 556 in order to provide for seasonal fluctuation. . . . 

These early decisions clearly reflect TVA management's recognition 
of its responsibility to prevent the transmission of malaria as a result 
of TVA impoundments. 

Water fluctuation in a reservoir may be called a "naturalistic" 
control measure — that is, it helps to create conditions which pit one 
natural factor against another in controlling mosquito production. 
By raising the water level in the springtime and then lowering it, the 
winter's accumulation of drift and flotage is stranded high on the 
banks of the reservoir where it can be easily disposed of. Keeping the 
water level high for a time during the spring growing season helps to 
retard the growth of marginal vegetation. Later, around the middle 
of June, as the mosquito breeding season gets well under way and 
marginal vegetation begins to encroach upon the clean shoreline, a 
regular schedule of raising and lowering the water level about a foot 
is begun and repeated every week to 10 days. This is followed in a 
few weeks by a successive lowering of the high points of the fluctuation 
so as to give a stair-step effect in the fluctuation pattern. These maneu- 
vers serve the purpose of removing floating material and of keeping 
vegetation out of water and water out of vegetation. They create an 
environment in which larvae of the anopheline mosquito are unable 
to thrive. Food supply for larvae is poor and they are exposed to natu- 
ral enemies (fish and other predators), to wave action, to sunlight 
and drying, and to other disturbances. This whole scheme is often re- 
ferred to as the "sheet anchor" of malaria control on the impounded 
lakes of TVA. 

198 Twenty Years of TVA 

Basic to this program of malaria control are researches and in- 
vestigations seeking to advance the frontiers of knowledge concerning 
the disease, and to discover more effective and economical methods 
for its control. By establishing collaboration with health agencies 
and institutions in the Tennessee Valley, both in the search for new 
knowledge and in the application of controls, TVA helped to stimu- 
late greater interest in malaria control in areas beyond the zone of 
direct influence of its own impoundages. This approach combined 
administration with sound epidemiological strategy. A narrower pol- 
icy would have ignored the fact that the prevalence of malaria re- 
sponds to influences other than those immediately associated with 
the shorelines of Tennessee River pools, and that it is therefore im- 
possible to create and maintain islands of control in a regional sea of 
prevalence. Influences such as improved housing, higher standards of 
living, increased urbanization, higher levels of education, and more 
widespread understanding by people of the way malaria is trans- 
mitted, all have a reducing effect on malaria prevalence. They help 
to interpose barriers between mosquito and man, and thus to reduce 
the chances of malaria's being carried from one person to another. 
The attack, therefore, was directed to the regional aspects of the 
problem, in order to develop a strategy that would bring success 
within the economic and technical range of existing resources. 

In 1933, TVA began its malaria control work on the inherited 
shoreline around Lake Wilson, of slightly better than 150 miles. To- 
day it must stand guard over a shoreline in excess of 10,000 miles — 
greater than the shoreline mileage of the Great Lakes. As reservoir 
after reservoir was added to the total responsibility of TVA for malaria 
control, the dollar expense at first increased. Since 1945, however, 
there has been a consistent decline in the cost of malaria control, 
despite additional reservoirs and soaring labor and materials costs. At 
the same time the prevalence of malaria, which in part of the Valley 
in 1934 involved from twenty to sixty per cent of the population sur- 
veyed, has now declined to the point that since 1949 it has not been 
possible to find in carefully conducted epidemiological studies a sin- 
gle case of proved naturally transmitted malaria within a one-mile 
zone of TVA reservoirs. Factors both economic and technical have 
caused malaria to beat a slow, steady retreat over the years in the 
Tennessee Valley, despite the creation of artificial circumstances which 
if uncontrolled might have produced a resurgence of the disease. 
Thanks to the collaboration of all interested agencies, private as well 
as public, malaria has virtually vanished from the Valley. 

During the past few years, there has emerged a broader concept 

Health 199 

of responsibility for safeguarding the public health against environ- 
mental influences. Insofar as control of insects is concerned, this con- 
cept includes their control to provide relief from nuisances as well 
as to prevent spread of disease. Georgia and South Carolina recog- 
nized this concept in 1950 when they amended their mosquito con- 
trol regulations to include insects other than the malaria vector. In 
the same year, the U. S. Public Health Service recommended to state 
health departments the broadening of legislation regarding water re- 
source facilities to include the control of mosquitoes for reasons of 
nuisance relief as well as for control of communicable disease. Al- 
though it is clear that TVA operations have resulted in an over-all 
decrease in breeding areas suitable for the propagation of biting in- 
sects such as mosquitoes and blackflies, some new local situations 
favorable for the propagation of so-called "pest" mosquitoes and 
other biting insects have been created and have commanded increas- 
ing attention. Soon the Division of Health and Safety expects to com- 
plete a survey of insects of potential public health significance breed- 
ing in TVA reservoirs. This survey will help TVA decide whether its 
mosquito control program should be broadened to include other in- 
sects in addition to the malaria vector. 

Stream Pollution Control 

The marked changes in flow characteristics in Ten- 
nessee Valley streams, brought about by the TVA water control pro- 
gram, had an important bearing upon stream sanitation, another 
problem of regional concern and bearing on the public health. Quiet 
reservoirs have capacities to assimilate pollution different from those 
of flowing streams. The physical and chemical characteristics of wa- 
ter in reservoirs are different from those of flowing streams. Stream 
biology is also different. Under conditions of impoundage and basin- 
wide water control, stream flow in the river channels is usually more 
uniform and extremes in flow are fewer than is the case under natu- 
ral conditions. 

To these changes in flow and in water characteristics must be 
added the waste and sewage disposal practices of industries and 
cities in order to get a true picture of the stream pollution problem 
in the Tennessee Valley as it was in 1933 and as it now exists. The 
implications of stream pollution extend beyond health interests. 
They touch upon industrial economics, upon aesthetics, and upon 
fishing, swimming, and other recreational values, as well as upon the 
safety and potability of public water supplies. 

200 Twenty Years of TVA 

Over fifteen years ago Arthur E. Morgan, former Chairman of the 
TVA Board of Directors, commented with regard to stream pollu- 

Water control planning . . . always will require a balancing of present 
needs against future possibilities, and a frequent surrendering of what 
we should like for what we imperatively must have. It must continue to 
be a process of give-and-take, of protecting as much as we can of potential 
values, while getting as much as is feasible of present benefits. 

For example, everyone wants our streams to be pure and uncontaminated, 
yet to demand that industry must suddenly do away with pollution would 
impose burdens too great to be assumed all at once. On the other hand, 
to see industrial pollution as a vested interest, the correction of which 
must be postponed to the dim future, is to surrender social control of 
precious and unique public resources. The wise course will be somewhere 
in between, in a policy of vigorous and aggressive action, tempered by a 
common sense appraisal of the burdens which can reasonably be imposed 
in the removal of pollution. 

The specific purposes named in the TVA Act do not include 
stream sanitation. No part of the capital costs of the enterprise is 
allocated to any phase of stream sanitation, including pollution 
abatement. Initially TVA activities for stream sanitation were judged 
to fall in the category of "Resource Development." 

In 1933, the concept that water quality constituted a basic and 
fundamental resource of the Tennessee Valley region was but inse- 
curely established. It was realized that in addition to its value as a 
modern large-scale navigation channel and as a tool for flood control 
and production of power, the Tennessee River system was an essen- 
tial part of the domestic and industrial water supply of the region, 
but the expansion of industry in the Valley and the tremendous 
growth in other uses that emphasized water quality were yet in the 
future. As a consequence little attention had been given prior to es- 
tablishment of TVA to the question of water quality, and informa- 
tion on the extent of pollution in the Tennessee basin and its tribu- 
taries was meager. 

In recognition of this lack of knowledge, the state health officers 
of the seven Tennessee Valley states in 1935 requested TVA to un- 
dertake a survey to secure basic data on the extent of pollution in the 
Tennessee River. The role of fact finder concerning the region's wa- 
ter resources was accepted by TVA. Co-operative relationships were 

Health 201 

established with the Public Health Service and the Geological Survey 
as well as with the states. The job in the Tennessee Valley was co- 
ordinated with the Ohio River Basin Pollution Survey. Facts were 
obtained concerning the sources, causes, and conditions of stream 
pollution in the Tennessee Valley. These facts later provided a sound 
basis for the development of stream pollution legislation in the various 
states. In 1945, when Tennessee enacted legislation looking to pollu- 
tion control, TVA agreed to the transfer of a member of its public 
health engineering staff to the state, where he eventually became a 
key member of the technical staff of the Tennessee Pollution Control 
Board. Interest in pollution control slowly extended in the region. 
Six of the seven Valley states now have legislation specifically pointed 
toward the control of pollution within their jurisdictions. The seventh 
acts under a general public health law in case polluters of streams 
introduce a health hazard; in other situations recourse is through 
suit for damage to riparian rights. 

Interest is now being revived in some of the states looking toward 
an interstate compact as an aid to correction of pollution problems 
which cross state lines. Support of this proposal is not universal, and 
its ultimate fate is yet to be decided. 

Progress in the abatement and prevention of pollution has been 
exceedingly slow. As a matter of fact, there has been an over-all in- 
crease in the amount of pollution in the Tennessee River system in 
the past fifteen years. This increase is in the order of 35 per cent over 
the past decade despite notable improvement in certain sections of the 
system. The reasons for the increase are the growing industrial ac- 
tivity in the area and the increase in population discharging do- 
mestic sewage into the streams. But some signs of progress are evi- 
dent. In Tennessee, a series of public hearings has been held through- 
out the state for the purpose of outlining general standards of water 
quality which the Pollution Control Board expects to be attained in 
the various Tennessee streams. Municipalities and industries discharg- 
ing wastes into those streams have been informed concerning the type 
of treatment to which their wastes must be subjected in order to 
maintain the standards fixed. As a result, construction of treatment 
facilities is under way in a number of cities. The great backlog of 
data developed by TVA concerning water quality and the influence 
of types and sources of pollution was highly useful to the Board in 
preparing for the public hearings and in establishing water quality 
standards. In North Carolina, a similar approach has been initiated. 

Passage of the Federal Water Pollution Control Act of 1948 was 

202 Twenty Years of TVA 

symbolic of the mounting national interest in water as a basic natural 
resource. This law required the Public Health Service to make sur- 
veys and studies of various drainage basins, to identify significant 
sources of pollution, and to develop comprehensive plans for pollu- 
tion abatement and control. The law provided that the Service should 
co-operate with the states in developing plans for correction. It speci- 
fied that the Service can act against a pollutor only on request or per- 
mission from the state. The groundwork laid over a period of many 
years by the TVA studies fitted admirably into this new responsibility 
of the Public Health Service for the development of comprehensive 
plans. The long-established co-operative relationships between the 
Public Health Service, the states, and TVA were again put to good 
use in the rapid development of a general outline of the problem in 
the Tennessee Valley. The base line report prepared by the Public 
Health Service under the Water Pollution Control Act was soon fol- 
lowed by a report prepared in popular style by TVA. TVA's report 
was intended to provide information about the stream pollution prob- 
lem as a means of helping to create and sustain public interest in 
stream pollution abatement and control. The Public Health Service, 
the states, and TVA are jointly developing a detailed report on the 
sources and types of pollution and on the specific abatement proce- 
dures required in one of the sub-basins of the Tennessee watershed. 
A complete set of such reports, if compiled, would provide a technical 
blueprint of the stream pollution problem of the Tennessee basin 
and what should be done to abate it. 

Over the past fifteen years, the locations of the major trouble spots 
and the factors involved in producing pollution at these spots have 
in large part been identified. Solution of the problem of stream 
pollution has lagged, indeed has lost ground. Pollutors have not yet 
adequately recognized their responsibility to take corrective action 
at the source of pollution, or if they have, have done little to demon- 
strate it. There has been some evidence of an attitude that because 
large quantities of water are available in nearby TVA reservoirs, they 
can be used to dilute pollution or carry it away downstream. Some 
apparently have thought it is a simple matter for TVA to jiggle the 
water level up and down and thus to absolve pollutors of what is 
basically their own responsibility. The real problem, as regards water 
level, is to adjust water releases in a way that will help pollutors dis- 
charge instead of avoid their responsibility and at the same time not 
interfere with the basic purposes for which TVA water control struc- 
tures were authorized by Congress. The problem is one of seeing 
unified river control clearly and in full perspective and of bringing 

Health 203 

about effective and co-ordinated development of all significant pur- 
poses in proper proportion. 

Co-operative Administration in Action 

As has been stated, TVA has relied heavily on the co- 
operation of other agencies, particularly the state and local govern- 
ments of the Valley, in developing and putting into effect its health 
program. Contractual agreements have been made with state health 
agencies and implemented through the local health departments. 
These contracts have included such services as periodic inspections of 
mosquito-catching stations and other survey activities to determine the 
effectiveness of the TVA malaria control program as developed and 
applied. Contractual provisions also have covered joint approval of 
personnel and plans of work. This type of collaboration with existing 
health agencies has certain inherent advantages. First and of para- 
mount importance, responsibility is shared through the participation 
of other agencies, and helpful co-operation supplants potential fric- 
tion. Second, the base of resources brought to bear on the problem 
is spread, costs are decreased, and the probability of constructive solu- 
tion is increased. Third, existing agencies are strengthened and stimu- 
lated, with resulting increases in local resources and leadership. 
Fourth, the influence of continuing improvement in methods is ex- 
tended beyond the immediate zone of interest, and achieves regional 
and even national scope. 

An interesting example of how such co-operation works may be 
found in a joint Alabama-TVA project of some years ago. Here the 
efforts of the state and local health departments and those of TVA 
were combined with the objective of developing malaria control 
throughout eight counties in north Alabama bordering on the Ten- 
nessee River. Definition of the details of the problem was undertaken 
by a group of six public health engineers working under the ad- 
ministrative direction of the Alabama State Health Department and 
in co-operation with TVA's field personnel. Salaries for the engineers 
were provided by TVA through contractual arrangement with the 
State Department of Health. As a phase of the program, specialists 
in health education were assigned to the eight north Alabama coun- 
ties through the several local health departments. In addition, the in- 
terest of school teachers was stimulated, and an organized effort was 
worked out to acquaint teachers with the problem of malaria con- 
trol and to help them take it into their daily teaching in the school- 
room. TVA technicians developed a malaria primer written at a level 

204 Twenty Years of TVA 

which could be understood by sixth-grade students. This and other 
educational materials were used in the program. A similar approach 
to definition of the technical problem of malaria control and to de- 
velopment of public understanding of it was made in Tennessee and 
Kentucky. The result was a degree of public awareness of malaria 
control and its problems in the Tennessee Valley which perhaps has 
not been exceeded anywhere else. 

Another example of the co-operative relationships established 
with health agencies and institutions in the Valley is the arrangement 
which was developed between TVA and the University of Tennessee 
College of Medicine. No Department of Preventive Medicine existed 
in the College prior to 1937; yet this school was said to supply three- 
fifths of the physicians entering into practice in that part of the 
Tennessee Valley in which existed the heaviest burden of malaria 
prevalence. This situation was of significance because the practicing 
physician is a key person in malaria prevention. With relatively small 
contributions from TVA and with the assumption of the major 
financial responsibility by the University, a Department of Preventive 
Medicine was established. It provided an institutional focus around 
which important malaria research developed. 

TVA malaria laboratories earlier established at Wilson Dam were 
busy developing more efficient and economical methods of field con- 
trol. Their work emphasized engineering principles and mosquito 
ecology. But a properly balanced program of research required that 
attention be devoted also to that phase of the life cycle of the ma- 
laria parasite which is spent in the human host. Such a program was 
launched at the University of Tennessee College of Medicine. Here 
opportunity for faculty research had been limited because of difficul- 
ties in securing adequate financial support. The modest financial 
grant made by TVA to the University brought together in research 
on malaria a number of departments within the College. The project 
grew until TVA's contribution constituted only a minor portion of 
the total budget. Other sources such as the Office of Scientific Research 
and Development, certain foundations, and the U. S. Public Health 
Service contributed their support. Among the dividends paid by the 
project, many of them having a direct bearing on TVA's responsibility 
in malaria control, were these: the faculty of an established educa- 
tional institution was given an opportunity to work on a problem of 
serious concern to the region served by the institution; the faculty 
was provided the vitalizing stimulus which grows out of active re- 
search; the way was paved for building a comprehensive program of 
drug testing during World War II when the principal source of qui- 

Health 205 

nine was cut off by enemy action in the Pacific; new leads concerning 
the management of clinical malaria and concerning new antimalaria 
drugs were discovered. 

Out of these collaborative enterprises also came new knowledge 
pertaining to methods of applying DDT by airplane, or as a residual 
spray to households, or in other ways for the control of mosquito pro- 
duction. Some of these methods were adopted immediately by the 
armed forces in the South Pacific. Subsequently, they were applied 
in widescale malaria control work in Greece and in other countries. 

Such illustrations can suggest the methods of operation and can 
indicate something of the results obtained in individual projects; 
they can hardly reveal the spirit in which collaboration has been 
practiced, or the scope of the co-operative effort. Co-operative health 
work has been undertaken with the state health departments of all 
seven states in which the Tennessee Valley lies. Specific joint ac- 
tivities have been carried on in over 46 counties of the Valley. In 19 
counties full-time local health service was established for the first 
time through collaborative action. TVA's role in these developments 
has been that of stimulator and, once a movement for collaboration 
in a given direction was under way, supporter. TVA might have as- 
sumed exclusive responsibility in dealing with health implications of 
the TVA program. It chose instead the way of partnership with ex- 
isting agencies, federal, state, and local. The result, after twenty 
years, is a TVA health staff which remains small but which, in 
achieving results, has utilized a network of co-operative arrange- 
ments by which every available resource is brought to bear on health 
interests induced by major TVA programs. The pattern of co-opera- 
tion which has emerged recognizes health as a regional resource and 
seeks to marshal and to increase regional strength in its develop- 

Chapter 13 

By Robert M. Howes 

Ihe Tennessee valley has always been a land of 
abundant natural resources for recreation. Its mountains are the 
highest east of the Mississippi. Its forests are of varied types, wide- 
spread and naturally luxuriant. Its streams and woods offer fish and 
game in both variety and abundance and it has very few pest mos- 
quitoes, a fact noted particularly by fishermen. Its climate is favor- 
able to outdoor recreation most of the year, and it is within a two 
days' automobile drive of more than half the people of the United 
States. Add to these the cultural and historic features of interest to 
tourists and vacationists, and the result is a combination of re- 
sources which establishes the area by nature as a resort region in the 
same sense that New England is a resort region, or the Lake states. 

Background of Recreation in the Valley 

Twenty years ago, when TVA started out, these facts 
were very little known by people outside the region and very little 
recognized by people within it. Such occasional tourists as might be 
discovered in the Valley normally came either because they had lost 
their way or because there was no convenient way to avoid driving 
through en route to Florida or the Southwest. Further, those who 
did come did not tarry long, for there were few accommodations and 
there was little to do if they should stay over. Local residents and 
tourists eyed each other with mutual suspicion, not to say distrust; for 
the former were reluctant hosts and the latter unwilling guests. 

Now, tourists are no longer strangers in the Valley. The Great 
Smoky Mountains National Park receives more visitors annually than 
any other national park, outranking such favorites as Yellowstone 
and Yosemite. Since World War II, visitors to TVA dams and lakes 
have increased from 10,000,000 to nearly 30,000,000 a year. Of the ten 
federal reservoirs receiving more than 1,000,000 person-day visits in 


Recreation 207 

1952, seven are in the TVA system. (The others are Grand Coulee, 
Lake Mead, and Lake Texhoma.) 

In 1941, the State of Tennessee sold something like 13,000 non- 
resident fishing licenses; ten years later it sold 190,000. Only three 
states, Wisconsin, Minnesota, and Michigan, sell more nonresident 
fishing licenses than Tennessee. During the same period, the boat 
docks and fishing camps on TVA lakes multiplied by four, increasing 
from 50 to over 200. Recreation and travel expenditures have become 
an important factor in the region's economy: they rank third, after 
manufacturing and agriculture. In 1952 they approximated 
$500,000,000. Valley states currently are spending between one and one- 
and-a-half million dollars annually in travel promotion. This is in addi- 
tion to the efforts of cities like Knoxville and Chattanooga that have 
their own tourist bureaus. To serve the new flow of tourists and vaca- 
tion travelers, innumerable roadside businesses are springing up. 
Motels and tourist courts in Tennessee nearly doubled in the period 
between 1947 and 1952, increasing from 428 to 801; they represent an 
investment of over $20,000,000. There are very few merchants in the 
Valley who have not, as a result of the influx of visitors, added some 
new lines of recreation equipment — fishing tackle, boating accessories, 
sporting goods. Fewer still are the merchants who fail to close up shop 
on Wednesday afternoon to go fishing themselves. 

In 1933 only Kentucky and Virginia, among the Valley states, had 
established state park systems. Now each of the Valley states is de- 
veloping such a system. In 1950, more state and locally administered 
park and recreation areas could be found on the shores of TVA lakes 
than on all other federal reservoirs combined. 

These developments add up to a dramatic change that has come 
about in the Valley in the last twenty years, a change that is reflected 
in local attitudes, in facilities, and in patterns of consumption. Many 
forces have contributed to the changing picture in recreation. The 
Civilian Conservation Corps, which was active from 1934 to 1942, 
helped put many recreational areas into usable condition. The Na- 
tional Park Service has been active throughout the period. State and 
local agencies, and in particular the new and growing state park de- 
partments, have played increasingly important roles. Changing na- 
tional attitudes toward work and play have had their significant ef- 
fects. Working in partnership with these and like influences has been 
the Tennessee Valley Authority. 

The TVA, it must be understood, does not count responsibility 
for recreation among its primary legal obligations. Recreation, in- 
deed, was not mentioned in the original TVA Act. It therefore finds 

208 Twenty Years of TV A 

its way into the TVA program as an auxiliary activity deemed appro- 
priate to the full development of natural resources. It follows that 
the staff concerned exclusively with recreation has never been large, 
varying from a maximum of a dozen in the early days to a minimum 
of two. Usually it has been less than half a dozen. This staff has had 
very few operating functions. Rather it has depended for results 
on negotiation and persuasion based on specialized knowledge and an 
alertness to opportunities. The agency's recreation people follow 
stated TVA policy in the matter of co-operation with established 
organizations, public and private. Without the burden of operating 
responsibilities, the staff has been able to adapt its basic objectives 
to the expanding capabilities and energies of the region's recreation 
agencies. TVA has deliberately kept its program experimental, divest- 
ing itself of activities which become repetitive in favor of new fields 
which hold promise of producing better results. Thus the two prin- 
cipal features of TVA's activities in recreation may be said to be their 
stimulative character and their flexibility. 

Inventory and Demonstration, 1933-1937 

Even before its headquarters were set up in Knoxville, 
TVA had started to collect facts about the recreation features of the 
Valley. By 1934, TVA personnel in Washington had compiled a very 
extensive file of correspondence with various local people in the Val- 
ley. This file contained facts about the location of parks, monuments, 
caves, waterfalls, springs, and other scenic features. By 1934 also TVA 
had hired a small staff, headquartered in Knoxville, to continue this 
job systematically: it was charged with responsibility for making in- 
ventories of the attractions of the region and laying out the broad 
outlines of planning, promotion, and development measures for 
recreation resource development. The results of these early studies 
are summarized in two reports, The Scenic Resources of the Tennessee 
Valley and Recreation Development of the Southern Highlands Re- 
gion. These reports preceded by several years somewhat similar studies 
undertaken by the National Park Service under authority of the 
Park, Parkway and Recreation Area Study Act of 1936. As pioneer- 
ing studies, they did much to establish the concept of scenic and 
recreation resources in the minds of the Valley people, many of 
whom came to see that their beloved mountains could perhaps give 
them a better living as scenery than as cornfields. 

As one editorial writer expressed it in commenting upon the pub- 
lication of TVA's Scenic Resources, "Our forefathers would have 

Recreation 209 

scratched their heads in wonderment if they had come across such an 
expression as 'scenic resources.' . . . Nature bothered the pioneer 
rather more than she delighted him. . . . Not until a good deal of 
the countryside was tamed could we really enjoy the wildness of the 
remaining part. Not until pretty recently have we perceived that this 
wildness has to be cherished or it will be lost. ... So 'scenic re- 
sources' now mean something definite to us, just as timber resources 
or mineral resources did a few decades ago. They are something we 
need to sustain or improve the quality of our lives." 1 

In making these inventories TVA performed a service which per- 
haps could not have been performed by any other agency. A com- 
pilation of a series of local recreation studies by the several state and 
local agencies (assuming such could have been organized) would 
have been conducted at the expense of efficiency, would have been 
made without benefit of trained staff, and would have lacked the 
perspective in evaluations required in this type of study. The result 
would have been a descriptive list of scenic features, rather than an 
inventory of a resource. 

In 1936, after these first field and inventory studies were com- 
pleted, TVA and the National Resources Committee joined in a call 
for two meetings of the southeastern state planning boards. In addi- 
tion to the Valley states, Florida and South Carolina also were rep- 
resented. These meetings were to review the studies which TVA had 
made and consider such topics as needed legislation, planning and 
promotion measures, zoning, hotel and restaurant standards, and, 
significantly, the role of citizen organizations. Legislative studies, in 
which TVA participated immediately following these two meetings, 
developed many of the principles which are incorporated in present- 
day conservation and recreation statutes of the Valley states, cities, 
and counties. 

In 1937, the Tennessee legislature created a Department of Con- 
servation, including notably divisions of state parks, game and fish, 
forestry, and hotel and restaurant inspection. Other states followed 
suit, roughly adopting the pattern of the Tennessee legislation. 
Shortly, all the states of the Valley had the basic enabling legislation 
to support a program of recreation resource development. There re- 
mained, then, the task of finding adequate public support and financ- 
ing to make this legislation effective. 

While these basic fact-finding studies were in process, TVA also 
was building a number of recreation demonstrations. Here the co- 
operation of the National Park Service and the CCC was sought. 
1 The New York Times, Sunday, May 29, 1938. 

210 Twenty Years of TVA 

Demonstration parks were built in the eastern half of the Valley at 
Norris and Big Ridge, and in the western half at Wheeler, Wilson, 
and Pickwick Dams. The aim of these parks was to provide tangible, 
three-dimensional examples of the recommendations of the reports. 
Here were swimming beaches, boat docks, vacation cabins, picnic 
areas, and group camps which people could use and enjoy. Here 
were more effective lessons in recreation development than any writ- 
ten report could possibly teach. 

Initially operated by TVA, most of these parks have now been 
incorporated in the state park systems of Tennessee or Alabama. The 
initial period of operation provided TVA staff with first-hand ac- 
quaintance with such practical operating questions as where to store 
empty Coca-Cola bottles, or what kinds of public liability are in- 
volved in operating a bathing beach. The experience of having solved 
such problems provided a practical background for many later staff 
discussions and the ring of authority to staff advice and assistance to 
other agencies who later found themselves face-to-face with similar 

Reservoir Studies and Plans, 1937-1941 

In 1937, TVA turned its attention to detailed recrea- 
tion studies of each new reservoir added in its river development 
program. While concrete was still being poured at the dams, recrea- 
tion technicians were out exploring the future shorelines of reservoirs- 
to-be. Certain questions of physical fact had to be answered. While 
land was still pasture or woodland or crops, surveys were made to 
determine what locations might make suitable boat harbors, bathing 
beaches, fishing camps. How warm would the water be? Would it be 
polluted? Would it offer good fishing? How much would levels be 
raised and lowered? As a result of these studies, TVA's recreation 
staff ended up with a whole bookshelf of reports. Reservoir by reser- 
voir, the reports set forth in detail the recreation potential. 

Another and quite different set of questions, those about people, 
had to be asked and answered. There was no point in planning a boat 
harbor if people were not going to take to boats. Would the people 
use the lakes? For what kinds of recreation? How many would there 
be? Where would they come from? Would their recreational needs 
and desires fit into the seasonal variations of water level which the 
water control program required? 

If it seems odd that TVA was still seeking answers to these ele- 
mentary questions as late as 1940, it must be remembered that ex- 

Recreation 2 1 1 

perience elsewhere had produced few answers that appeared applica- 
ble. The artificial reservoirs that had been built in the Valley previous 
to TVA were biological deserts, affording no fishing. The new lakes 
were producing fish in large quantities, but whether the yield would 
prove permanent could not be foretold. The outboard motor had 
been invented, but it was not being mass produced. Moreover, it cost 
too much for the average citizen. Incomes in the Valley were low. 
Mass recreation markets had not been developed. No other federal 
agency in 1940 had concerned itself with the recreational use of 
multipurpose reservoirs. 

The TVA Act reflected this lack of concern with recreation, for as 
has been noted, it did not even use the word. In reflecting on the 
issue from the vantage point of experience to 1940, TVA therefore 
had to face two important questions. First, are the recreation resources 
of the TVA lakes a proper subject of public policy and concern? If so, 
an amendment to the act would seem to be necessary. What kind of 
amendment could be determined only by answering a second ques- 
tion: at what level of government — federal, state, or local — might pub- 
lic concern most properly be reflected? Any doubts regarding the first 
questions were removed when President Roosevelt promptly and 
somewhat dramatically transmitted to the Congress a 1940 report on 
Recreation Development of the Tennessee River System. His trans- 
mittal message clearly established recreation along with hospitals and 
schools as a legitimate area of public policy. The President's message 
still left the second question unanswered. In fact TVA's own report 
did not face it squarely, but — still haunted by old doubts — avoided the 
issue, comparing what was actually happening with previous experi- 
ence. The legislation TVA had tentatively in mind was never intro- 
duced. Instead, the staff took a fresh look at TVA's authority to 
handle lands acquired in connection with reservoir construction. 

In 1935, section 31 of the act had been amended to require that 
TVA dispose of any real estate that was surplus to its needs. Section 
4k had also been amended to authorize, for a limited period, leas- 
ing of land for recreation. It was concluded that, if section 4k of 
the act could be further amended to grant permanent authority for 
TVA to convey actual title (rather than lease) to recreation lands to 
those interested in their use and development, the way would be open 
to place recreation developmental and operating responsibility at 
whatever governmental level seemed most appropriate. In 1941, there- 
fore, section 4k was amended to grant such authority. These two 
sections of the act, one giving freedom to lease, sell, or transfer 
for recreation purposes, the other making it mandatory to dispose of 

212 Twenty Years of TVA 

surplus land, clearly set the stage for recreational development of the 
lakes by state and local agencies rather than by TVA. 

TVA now neither develops nor operates any recreation areas or 
facilities. Instead, it utilizes sections 4k and 31 of the act to place 
reservoir lands in the hands of other agencies for recreation develop- 
ment and operation. Especially since World War II, TVA has trans- 
ferred lands suited for parks, wildlife areas, and similar public 
recreation purposes to other government agencies able and willing to 
accept the responsibility of managing and developing them. Lands 
suited for private and commercial recreation use, it sells. At the pres- 
ent time there are in effect, between TVA and other government 
agencies, some 110 transfers, leases, licenses, or permits covering park, 
wildlife, and other public recreation areas on TVA reservoirs in the 
seven Valley states. Several times this number of tracts have been con- 
veyed by TVA to private corporations, partnerships, and individuals 
for commercial and private use of recreation property. 

State and Local Administration of Recreation, 

In 1942 and 1943 TVA entered into memoranda of 
agreement with the conservation departments of Alabama, Kentucky, 
North Carolina, and Tennessee, the four states which have within 
their boundaries the lion's share of TVA lake frontage property. 
These agreements simply recorded the fact that the objectives of TVA 
and those of the state in the field of recreation were substantially the 
same, and that the two would work together to bring them about in 
the public interest. 

Within the framework of these agreements and subject to the in- 
terruptions of war, the states have taken on ever-increasing respon- 
sibilities: first, for direct administration of certain parts of the reser- 
voir shorelines for public recreation use, including parks and wildlife 
areas; and second, for technical, advisory, and planning services to 
local governmental agencies and to private individuals in developing 
other parts of the lakes for recreation. As state and local governments 
gained experience with zoning, subdivision controls, and health and 
sanitary regulations, TVA moved to substitute local controls for the 
federal controls which it had theretofore exercised through its lease 
and license procedures. Thus at the end of World War II, TVA could 
sell reservoir lands with little fear that shantytowns and honkytonks 
would undermine their recreation advantages. On the contrary, the 
security that can come only from actually owning land with a mini- 

Recreation 213 

mum of restrictions has attracted a great deal of private investment 
that would not otherwise have been made. The value of recreation 
facilities and equipment on TVA lakes and their shorelines now totals 
about $44,000,000 and most of this represents privately owned busi- 
nesses, vacation cottages, and boats. Improvements valued at $6,500,000 
have been made in state and local parks. Almost none is in direct ex- 
penditures by TVA. 

Table 5 reflects in part the expanding capabilities and services of 
these state park systems. Total annual state expenditures for park and 

Table 5 
State Park Expenditures, Personnel, and Attendance, 1 941-1953 




*94* *953 

*94* *953 

North Carolina 

$ 69,912 

1 28,357 



% 818,385 




29 45 
39 165 
11 30 
4i 83 

120 323 





h 152,357 


a Includes only full-time, year-round personnel; excludes seasonal and part-time personnel. 
Source: State Park Statistics, National Park Service, 1941 and 1953. 

recreation purposes in 1953 were 15 times those in 1941; use (attend- 
ance) of state park areas, nearly 71/^ times. These figures are more 
than the statistical expression of more areas in park use, more vaca- 
tion cottages, more beaches, more good times for more people. They 
also reflect a growing concern on the part of leaders of state govern- 
ment for the place of public recreation in the lives of their citizens 
and an increasing sense of responsibility for the job of recreation re- 
source development. While not always easy to evaluate, park areas 
leased or conveyed by TVA sometimes served to spark and revitalize 
an entire park system. The Kentucky state park system, for example, 
is the oldest in the Valley. Until 1948, it had consisted exclusively of 
scenic and historic monuments affording much to look at but little to 
do and no incentive to stay. Appropriations were insufficient even to 
keep these areas in repair. In 1948 and 1949 TVA conveyed to the 
state three areas on Kentucky Lake for park purposes. Neither spec- 
tacularly scenic nor steeped in history, these areas nevertheless pro- 
vided almost unlimited opportunities for vacations and water sports. 
Since 1948, the state has developed them into attractive, year-round 

214 Twenty Years of TVA 

vacation and conference centers with cottages, restaurants, hotels, fish- 
ing docks, swimming pools, picnic areas, play fields, a golf course, and 
two airfields. As such facilities proved themselves, they were added 
to older parks in the system. Today there is something to interest 
every member of the family in most Kentucky parks. The system is 
commanding the attention and interest of state park leaders through- 
out the nation. 

Early in 1953 TVA transferred to the State of Tennessee 226 public 
access areas on nine reservoirs. Negotiations are under way for the 
transfer of similar areas to the states of Mississippi, Alabama, Georgia, 
and North Carolina. These areas, most of them small — usually not 
over five or ten acres — are located at intervals along the lake shores at 
road ends or at other places which afford convenient access between 
land and water. They guarantee that people will have places where 
they can go down to the water and launch a boat, wet a line, spread 
a picnic lunch, and enjoy the outdoors. They do for the lake what a 
roadside picnic area does for the highway: increase its usefulness for 

The transfer of these areas to the Valley states, local agencies, and 
individuals outlines a pattern of recreation development of federal 
multipurpose reservoirs which is believed to be unique in the nation. 
Ten years were required to complete the outline, and details of the 
pattern are yet to be filled in. But the course is charted, and future 
events along that course will reflect the story of people and agencies 
who travel it. 

Special Studies of Regional Recreation Problems 

Was TVA wise in placing so much responsibility for 
developing the recreation resources of the lakes on the shoulders of 
state and local agencies, organizations, and individuals? The answer to 
this will be judged, in part at least, by the success encountered in doing 
the job undertaken. In order to provide maximum assurance for the 
success of this policy TVA tries to keep in close touch with recrea- 
tional trends. TVA personnel make an annual survey of the nature 
and extent of recreation use and development around the lakes. Ta- 
ble 6, below, summarizes the findings of the latest survey (1953). 
These periodic appraisals show what is happening along the lakes. 
TVA also attempts to keep abreast of developments elsewhere in rec- 
reation, and to this end makes considerable informal use of outside 
consultants. To date, experience in the Valley demonstrates anew the 

























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216 Twenty Years of TVA 

validity of an old principle sometimes forgotten: if responsibility is to 
be delegated, it must be delegated whole, not piecemeal. 

This is not to say that TVA has no stake in the success of its num- 
erous partners. On the contrary, its stake is large. Aside from main- 
taining day-to-day relationships on specific problems of joint interest, 
TVA feels it can best contribute to the success of the total program 
by concentrating the efforts of its small recreation staff on special 
problems common to all recreation interests in the region. The staff 
is currently active in five problem areas. 

The first concerns the recreation benefits of multipurpose reservoir 
construction. Here a study which has been under way for a number of 
years seeks to define and measure recreation benefits, not in the custom- 
ary terms of so many days' use or so many dollars spent, but in 
longer-range terms which will be useful in project justification, cost 
allocation, and reimbursement. The problems encountered here are 
complicated and highly technical — as complicated as, for example, 
those in navigation and flood control. But recreation is a new field. 
There is no general agreement among recreation experts themselves 
as to what constitutes adequate standards of economic measurement. 
There is even less agreement between recreation and other fields as to 
the comparability of such standards with those used in other fields. 
For example, are gross recreation expenditures stimulated by the de- 
velopment of a reservoir a benefit creditable to the reservoir or merely 
a transfer of expenditures from another area? Should gross expendi- 
tures be reduced to net? If so, by what techniques? As a consequence, 
controversy frequently attends efforts to sharpen and standardize cri- 
teria of progress in recreation. 

Second, in the field of education TVA is doing a modest amount 
of work in outdoor education and school camping. Educators in many 
states, including Michigan, New York, and Florida, regard school 
camping at the elementary and high school levels as an excellent 
means of putting the lifeblood of actual outdoor experience into aca- 
demic curricula. TVA regards outdoor education and school camping 
as a means of obtaining better recreation use of the lakeshores and 
also as a device for providing actual experience in some phases of 
the total resource development program: forestry, agriculture, fish 
and wildlife. This joint interest of TVA and the educators is presently 
reflected in a course for teacher training in school camping and out- 
door education at the Florence (Alabama) State Teachers College. It 
is expected that interest in this subject will spread, with other institu- 
tions in other states joining in the demonstration. One result, already 

Recreation m 7 

apparent, is the active interest of a number of north Alabama school 
systems in leasing reservoir lands for school camp purposes. A second 
is a series of teacher-training workshops in actual camp situations, 
where teachers are themselves participating in such practical out-of- 
door education experiences as camp menu planning, woodcraft, and 
nature study in preparation for instructing classes in outdoor situa- 
tions rather than in the classroom. 

A third study, also in the field of education, involves a research 
and extension program in tourist and resort services. Such a program 
would do for the operator of the fishing camp, the motel, and other 
small recreation businesses what the county agent does for the farmer. 
It would embrace such topics as accounting methods, employee selec- 
tion and training, purchasing, interior decorating, grounds mainte- 
nance, promotion, guest activities, menu planning, and all the other 
hundreds of details which spell the difference between success and 
failure for the operator, between satisfaction and disappointment for 
the vacationist. TVA has identified the need and has done research 
on the organization, conduct, and cost of such a program. It is now 
working with a land-grant college and with recreation trade associa- 
tions in the Valley to get the project under way. 

A fourth line of inquiry is designed to determine how state adver- 
tising and development agencies can get more and better results than 
they are presently getting from the million and more dollars that they 
are spending each year in travel promotion. 

The final problem under study concerns a family vacation facility 
in the Tennessee Valley similar to the holiday camps which are prov- 
ing so popular in England and the Scandinavian countries. As has 
been noted, travel and recreation expenditures in the Valley have in- 
creased in twenty years from an insignificant amount to half a billion 
dollars a year, with substantial investments being made by local busi- 
nesses in new recreational accommodations. Great as this growth is, it 
is not enough. Too much of the Valley's recreation business is still 
based on the idea that people are just passing through, making one- 
day or two-day stop-overs. Another segment is based on the single idea 
of fishing. The Valley will not approach its full potential until it pro- 
vides facilities and programs for vacations for the entire family, rather 
than an overnight stop for fishermen. What TVA has in mind in such 
a facility is a complete resort village with accommodations for 2,500 
to 3,000 people under single management. Such a center would offer 
not only a place to stay and eat but a wide variety of things for every- 
one in the family to do. It would afford quality merchandise. The best 

218 Twenty Years of TVA 

of entertainment, a crafts program, conducted play activities, even 
baby sitters would be provided. And it would offer these things at a 
modest price. 

TVA would not build or operate such a facility, but would sell or 
lease a site on which it could be built. TVA personnel would also do 
research on design, financing, operating costs, management, and rela- 
tion to local governments and people. Because it might not repay its 
original cost (few large recreation enterprises do), the backers of the 
facility would have to be prepared to write off the capital investment. 
For this reason TVA is looking to labor or management, or a com- 
bination of both, to sponsor the development. Preliminary investiga- 
tions are most encouraging. Those with whom the idea has been dis- 
cussed have expressed positive interest. The proposal appears defi- 
nitely worthy of further exploration. 

Chapter 14 

Economic Development: 
An Appraisal 

By John V. Krutilla 


pulsory powers in the economic field. Except for the specific authority 
centering around the development of certain physical resources, it is 
authorized only to undertake research and make plans for an inte- 
grated and unified development of the Valley region. Such plans must 
be implemented through demonstrations, through persuasion and 
education, and through recommendations to federal and state govern- 
ments for legislation and for expenditure of public funds. In apprais- 
ing the influence of TVA on total economic development in the Ten- 
nessee Valley region, an understanding of this framework of action is 
important. In this context, it becomes readily apparent that it is im- 
possible to bestow upon TVA either full credit for the region's greater 
economic progress during certain periods or full blame for its lag dur- 
ing other periods. A sound evaluation of the influence which TVA 
has exerted on regional development would have to take account of 
both the direct and the indirect results of individual TVA programs, 
with proper allowance for collateral factors. 

It is not the purpose here to examine progress recorded in the 
Valley in terms of the separate substantive programs of the TVA. That 
such progress has been great since 1933 is abundantly clear. It has 
occurred in greater or lesser degree in almost every area. For the most 
part, though of course not exclusively, it has come as a concomitant 
of the Valley's shift from a predominantly agricultural area to an im- 
portant and expanding industrial region. In this analysis emphasis is 
placed on the industrial expansion of the Valley from 1933 to 1953, 
with economic growth as a prominent and persistent undertone. 


220 Twenty Years of TVA 

Evolution of Program Thinking on Industrial 

TVA's thinking about methods of improving the in- 
dustrial environment of the Valley, and its resulting operating activi- 
ties, has undergone an evolution which in the main has reflected the 
changing economic circumstances of the region and the nation. The 
philosophy which prevailed in 1933 was influenced by two quite ob- 
vious factors. First, in a region where agriculture had always provided 
the main source of income and engaged the majority of the labor 
force, the principal developmental need appeared to be in agriculture. 
Since the majority of the people were engaged in farming and farm 
prices had declined drastically, income in the Valley had fallen to a 
level of only $163 per person in 1933 — only 44 per cent of the national 
average. Second, while the Valley needed more industrial employment 
in order to provide work for those not fully or gainfully employed on 
the farm, industrialization in 1933 did not appear to offer a fruitful 
approach to the problem. In the face of a depressed national economy 
with a large proportion of its industrial facilities idle, the prospects 
for expanding regional employment in manufacturing did not look 
at all promising. In view of these circumstances attention was directed 
to the immediate problems of a suffering rural economy, of depleted 
soils, eroded lands, and uncontrolled water resources, as an initial step 
toward improving economic conditions. The effort was directed at re- 
habilitating land resources and developing more fully the forest, min- 
eral, and water resource potential of the region. 

In addition to these objective factors, early thinking within TVA 
gave heavy emphasis to rural regeneration and development. In line 
with a philosophy widely held during the depression period, much 
TVA thinking ran to a regional economy with its foundation firmly 
based on a rural way of life. In such a systemjnifestry was conceived 
of as playing a secondary and complementary role to agriculture. 
Many subscribed to the belief that the concentration of men and ma- 
chines in huge urban centers created an environment unwholesome 
for man. As an alternative it was proposed to bring industry to the 
small rural community. The countryside would become dotted with 
small factories producing commodities from agricultural raw materials 
by persons only partially engaged on the farm, or by those who con- 
stituted the vast surplus of labor which piled up on the farms for 
lack of industrial employment elsewhere. In this way the ties of the 
rural factory worker with the soil, the wholesome rural environment 
and rural institutions would not be disturbed. Indeed, it was envis- 

Economic Development 221 

aged by some in those days that a new kind of society could be devel- 
oped in which agriculture and industry would join hands and in 
which the desirable qualities of rural living could be preserved. 

The early efforts within TVA to help move economic life in the 
Tennessee Valley in this direction advanced mainly along two lines. 
First, a good deal of research was undertaken to determine the re- 
source potential of the Valley in agriculture, forestry, and minerals, 
for the resource base itself contained the limits of the opportunities 
for fusion. Quite intensive exploration of mineral deposits, many of 
which have since been put to use, was undertaken during these early 
years. Agronomie and fertilizer research became a major operating 
program. The forest resources likewise received careful attention, 
with emphasis on reforestation both as a conservation measure and as 
a means of improving the long-run supply conditions for the forest 
products industry. A second line of activity dealt largely with research 
on and development of processes and equipment which would utilize 
regional resources through rural manufacturing. A laminated flooring 
project, for example, was developed with the object of producing a 
high-grade laminated hardwood product from low-grade hardwoods 
for which there was little market. Research was also undertaken along 
such diverse lines as exploring the possibilities of growing, processing, 
and marketing flax; developing a low-cost paint from local minerals; 
and improving food-processing equipment. These efforts were impor- 
tant in the context of a serious depression with restricted opportuni- 
ties for over-all employment expansion. Insofar as they added a 
supplement to the income of rural families, they were effective in 
ameliorating conditions and improving, in a modest way, the living 
standards of those involved. The degree to which the unemployment 
problem could be solved through these methods, however, proved to 
be quite limited. 

By 1939 the economic situation had begun to change significantly. 
Some of the idle industrial capacity had become re-employed and some 
had been retired from production through obsolescence. The impact 
of World War II in Europe was beginning to be felt and, after our 
own entry into the war, production requirements increased spectacu- 
larly. Unprecedented demands were made on American industry and 
a tremendous industrial expansion was required to meet the needs of 
the war effort. The Tennessee Valley was ready to share in the new 
obligations and opportunities. Programs initiated in an earlier period 
had provided inventories of the region's natural resources and these 
were pressed into use as the demands expanded. The most important 
program of course was the stepped-up construction of multipurpose 

222 Twenty Years of TVA 

dams on the river and its tributaries. From these projects flowed eco- 
nomic benefits in the form of power; higher quality process water in 
the reservoirs; flood control, making safe from overflow large tracts 
of industrial-site lands; and low-cost water transportation channels ex- 
tending from the mouth of the river some 600-odd miles upstream to 
Knoxville. Many industries took advantage of these developments to 
locate plants in the Valley during the war. 

Since World War II, the situation has altered yet again. Because 
of the inordinate demand for power created by the war and postwar 
industrial expansion, the increased demand for power by residential 
and rural consumers, and the heavy requirements of defense electric 
needs (as in the case of the atomic energy development at Oak 
Ridge), the available low-cost hydro potential of the Tennessee River 
has been virtually exhausted. Thenceforward the electric generating 
capacity necessary to meet new and expanding needs had to be based 
on coal-fired steam plants. Steam power is, of course, more costly than 
hydro power, and as a result the previous advantage enjoyed by the 
region has been narrowed. In fact the Tennessee Valley can no longer 
compete in power cost on an equal footing with such low-cost power 
areas as the Pacific Northwest where large blocks of undeveloped hy- 
dro potential still remain. 

These factors, coupled with completion of the waterway system 
and with assumption by state and local agencies of major responsibil- 
ity for remaining physical resource development, have suggested a re- 
orientation of TVA's industrial development activities. Recent eco- 
nomic analyses have indicated that agriculture and rural industries 
alone will not be able to meet the underemployment problem, or 
even to provide the primary objective of economic development. Con- 
sequently interest within TVA has shifted in another direction, and 
emphasis currently is on research in labor resources and in opportuni- 
ties for market-oriented industries. 

One of the preconceptions commonly encountered among other- 
wise well-informed people is that southern labor cannot compete with 
northern labor in efficiency and is not readily adaptable to industrial 
work and discipline. The chief reasons advanced in support of this 
contention are that the efficiency of labor is in part the result of a 
long process of close association with industrial techniques in which 
training, traditional skill, and work discipline play an important role. 
Firms interested in locating new plant facilities in the region fre- 
quently have expressed fear that, using southern labor, they would 
be unable to meet competition in their field. Persons in industrial de- 
velopment work at the TVA have concluded that this belief should be 

Economic Development 223 

challenged, and a number of research projects have been sponsored by 
TVA to look into the question systematically. Preliminary results sug- 
gest that, contrary to widespread assumption, southern labor is quite 
as adaptable to industrial work as northern labor and that little diffi- 
culty will be encountered in training to new industrial tasks men and 
women who formerly had only rural experience. TVA has also been 
interested in encouraging development of an environment in the area 
of labor relations which is conducive to expanding industrial develop- 
ment in the region. 

In its industrial development work TVA follows a policy of work- 
ing closely with state and local agencies. A number of research pro- 
jects in this field have been carried out by state colleges and universi- 
ties under contract with TVA. Community leaders are encouraged to 
participate in such studies. In these ways it is hoped that people who 
are directly concerned with the problems and who bear primary re- 
sponsibility for their solution will gain an intimate understanding of 
the underlying issues, and that they will profit from an exchange of 
viewpoints obtained through the co-operative effort. 

A distinct type of industrial development effort is finding favor 
in a number of districts. Local distributors of TVA power have formed 
industrial development associations which work aggressively to keep 
industrial prospects informed about locations, community facilities, 
and other advantages which their localities afford. The north Ala- 
bama and north Mississippi associations afford examples of this type 
of local leadership. 

TVA's activities in the field of industrial development would of 
course be largely ineffectual without the vigorous co-operation of the 
states and without acceptance of a large share of the attendant respon- 
sibilities by state agencies. Among state administrative units active in 
the area are planning commissions, industrial development divisions, 
departments of agriculture and industry, departments of conservation, 
forestry divisions, geological survey units — the list could be extended 
at length, for the agencies are numerous and varied. As these agencies 
grow in number and functions, they assume a greater and greater 
share of responsibility for the industrial development of the Valley. 

The Emerging Industrial Pattern 

The growth of industry in the Tennessee Valley in re- 
cent years has been little short of spectacular. Figures are available 
which indicate that manufacturing employment in the Valley ex- 
panded from 222,000 workers in 1929 to 440,000 in 1953, an increase 


Twenty Years of TVA 

of 99 per cent. The comparable increase in 1 1 southeastern states was 
82 per cent, in the nation 64 per cent. Manufacturing income grew 
from $226,000,000 in 1929 to $1,363,000,000 in 1953, an increase of 
502 per cent as compared to 443 per cent in the Southeast and 321 
per cent in the nation over the same period. The industrialization of 
the Valley has not occurred in a vacuum, of course, but on the con- 
trary has been influenced by national policies and by the national and 
indeed the world-wide economic expansion. Further, the develop- 
ments in the Valley region are closely related to the economic progress 
of the Southeast as a whole, where underdeveloped physical resources 
and an under-used labor force have attracted a significant share of the 
nation's recent industrial expansion. At the same time, it is worthy 
of emphasis that the Valley outran the Southeast and the nation as 
well in manufacturing growth from 1929 to 1953. 

Industrial development in the Valley has occurred at an uneven 
pace, primarily because of the varying demands of the national econ- 
omy. Industrial activity in the region in recent years has been char- 
acterized by a depression decline, by a period of recovery, by a swift 
expansion during World War II, and by continued growth (but at a 

Chart III 

Total Income, Manufacturing Income, and Manufacturing Employment in 

the Tennessee Valley Region, 1 929-1 953 

6,000 - 





Economic Development 225 

diminished rate) in the postwar period. The several indicators of in- 
dustrial growth recorded in Chart III give ample evidence of the over- 
all trend. 

The point was made earlier that industry in the Valley has ex- 
panded more rapidly than agriculture. Table 7 shows the relative 

Table 7 

Estimated Income Payments by Major Components in the Tennessee Valley 

Region a 
Percentage Distribution in Selected Years, 1 929-1 953 

Major Income Component 




i 94 6 







1 1 







Trade and Service 


















Property Income 


















Total Income Payments 







NOTE: Figures may not add to ioo per cent because of rounding. 

a Includes 1 25 counties in the Tennessee Valley and 76 counties served by TVA power dis- 
tributors outside the Tennessee River drainage basin. 

Source: Based on estimates by U. S. Department of Commerce, from special unpublished 

changes in importance in seven major income-producing activities 
from 1929 to 1953. The most significant changes concern the relative 
positions of manufacturing and agriculture. In 1929, some 23 per cent 
of the region's income came from agriculture, whereas manufacturing 
provided only 15 per cent. By 1953, these positions were virtually 
reversed, with manufacturing providing 22 per cent of the income 
compared with 11 per cent for agriculture. It is also interesting to 
note that, in terms of its share of income payments, construction more 
than doubled and government increased 2I/2 times during these 24 
years. The major portion of the latter was accounted for by expansion 
of state and local government expenditures, including publicly owned 

Employment in manufacturing exceeded 400,000 in 1944. Because 
of the heavy concentration in defense industries, notably the atomic 
energy works, a substantial reduction in employment occurred be- 
tween 1945 and 1947. Since 1947 such growth has occurred in other 


Twenty Years of TVA 

lines of production that employment in the region's industries now ex- 
ceeds wartime levels. Manufacturing production workers in 1947 were 
largely concentrated in six industries — textiles (22 per cent), chemi- 
cals (including the Oak Ridge atomic energy operations, 13 per cent), 
apparel (11 per cent), lumber and wood products (11 per cent), pri- 
mary metals (7 per cent), and food (7 per cent). Each of these in- 
dustries employs more than 20,000 workers. Fabricated metals; 
leather; furniture; and stone, clay, and glass each employs more than 
10,000 workers. 

Chart IV 
New Workers in Fast-growing Industries in the Tennessee Valley Region 

I 939" I 947 




10,000 15,000 




In many ways, the growth pattern of industries in the region is 
more significant than the static picture as of any specific time. Be- 
tween 1939 and 1947, 19 out of the 20 major industry groups grew in 
the Valley at a faster rate than in the nation, and 11 of these indus- 
tries showed greater rates of growth than in the Southeast. Five of the 
latter industries (those shown in Chart IV) each added 5,000 or more 
workers. It is significant that the high-wage industries are growing 
more rapidly than the low-wage industries. 

The chemical industry, characterized by relatively high wages, has 
expanded very rapidly and has become the second most important 
industry in terms of employment. By 1947 it employed 13 per 
cent of all factory workers in the Valley. For a region which employs 
less than 3 per cent of the nation's manufacturing workers, the 
8 per cent of the nation's chemical workers it accounts for repre- 

Economic Development 227 

sents a regionally well-developed industry. TVA's programs have had 
a close relationship with some of the major developments in the chem- 
ical field. One of the major factors which influenced the location of 
the Oak Ridge atomic energy plant in the Valley during World War II 
was the ability of TVA to provide the large quantities of power re- 
quired in a relatively short time. Similarly, research and developmen- 
tal work at the TVA chemical plant at Muscle Shoals have contrib- 
uted materially to the developments in fertilizer production. 

Growth in the primary metal industries was almost equally as 
prominent. This was accounted for principally by the expansion of 
aluminum facilities at Alcoa, Tennessee, and the location of the Reyn- 
olds Metals Company (also a producer and fabricator of aluminum) 
in northern Alabama. Aluminum requires relatively large amounts of 
electrical energy per ton of production, and the hydro resources of 
the Valley were a dominant factor in the regional expansion of this 
industry. Although the growth of aluminum production in the region 
has been most dramatic because of the numbers of persons employed, 
many smaller electrometallurgical industries have grown along with 
aluminum. These industries in 1939 accounted for roughly 5 per 
cent of the nation's total employment in electrometallurgy; by 1947 
they had increased their share to 8 per cent of the total. From a 
survey of the current trend, it appears likely that the region will con- 
tinue in the forefront in electrometallurgical production. 

Other industries which exhibited greater rates of growth than ei- 
ther the nation or Southeast between 1939 and 1947 were food proc- 
essing (8,000 new employees), leather (6,000), and furniture (5,000). 
Rubber (6,000) and fabricated metals (6,000) each had slower rates 
of growth than in the Southeast; yet they still had faster rates of 
growth than the average for all industry in the Valley (55 per cent). 

Although other industries have grown rapidly, textiles — knitting, 
cotton and rayon fabric manufacture, yarn and thread mills — which 
have been long established in the region added 8,000 workers and still 
remained as the top employer in 1947. This industry, however, is sub- 
stantially less important in the Valley region than in the remainder of 
the Southeast. Twenty-two per cent of manufacturing employment in 
the Valley is in textiles, while it accounts for about 31 per cent for 
the Southeast as a whole. Moreover, textile employment has not been 
increasing rapidly in the Valley. From 1939 to 1947 the rate of increase 
(13 per cent) was only a fraction of the average for all industry in 
the region, and was below the average for the Southeast (16.5 per 
cent). The Valley's apparel and lumber industries also have grown 
more slowly than in the Southeast and more slowly than the all-indus- 

228 Twenty Years of TVA 

try average rate in the Valley; yet, because of their preponderance in 
the past, they have added large numbers to the Valley's ranks of in- 
dustrially employed (8,000 and 10,000 new workers, respectively). 

Some Economic Consequences of Industrializa- 

The effects of industrialization upon the economic life 
of the Tennessee Valley and the well-being of its people can well be 
imagined. Fortunately, they can also be measured, within limits. 

Note has been made of the 99 per cent increase in manufacturing 
employment in the Valley from 1929 to 1953. This is a significant fig- 
ure, but even more important than the fact of absolute increase is the 
trend in kind of employment. Throughout the Southeast the extrac- 
tive industries (principally agriculture, and secondly mining) domi- 
nated the economic scene until quite late; then they made way slowly 
for such low-income industries as lumbering and textiles, which in 
their turn exercised a controlling influence on the region's economic 
life. Only in the last thirty years have the high-income industries con- 
sequent upon industrialization made their appearance, and only since 
about 1930 has their influence been significantly felt. 

In the Tennessee Valley, high-wage industries more than doubled 
the number of their employees in the eight years between 1939 and 
1947. Even so, the proportion of workers engaged in industries with 
lower-than-average annual earnings remains quite high, so dominant 
has been the position of those industries. The trend nevertheless is in 
the direction of high-wage and away from low-wage industries. In 
1939, workers in below-average-wage industries represented 73 per 
cent of all manufacturing employees in the Valley; by 1947 they had 
declined to 64 per cent of the total. 

The figures of Table 8 reveal clearly the employment trend toward 
the technologically more advanced and higher paying industries. The 
trend away from agriculture is comparable in the Tennessee Valley 
region, Southeast, and nation; the loss in agricultural workers from 
1929 to 1953 was 40 per cent, 45 per cent, and 37 per cent, respectively. 
The trend toward manufacturing, pronounced throughout the coun- 
try, was much greater in the Tennessee Valley, where manufacturing 
employment from 1929 to 1953 increased 99 per cent as against 82 
per cent in the Southeast and 64 per cent for the country as a whole. 
Employment in the enterprises consequent on manufacturing growth 
— trade, finance, transportation, communication, construction, profes- 
sional services, and the like — likewise increased greatly from 1929 to 

Economic Development 229 

Table 8 

Structure of Employment in the Tennessee Valley, Southeast, and United 

Percentage Distribution, 1929 and 1953 



Major Industry 




(201 Counties) 



United States 





































I5- 1 





Service a 









11. 1 


12. 1 




1 00.0 

1 00.0 

1 00.0 

1 00.0 



Total Em- 

ployed (000) 


i ? 776 





* Includes transportation, communication, and other public utilities; finance, insurance, and 
real estate; business and repair services; entertainment and recreation; professional and related 
services; and personal services. 

Source: Data for the United States and Southeast are from employment statistics of the Bureau 
of Labor Statistics, U. S. Department of Labor. Estimates for the Tennessee Valley were made by 
allocating a portion of state totals to the groups of Valley counties within the several Valley states 
on the basis of tabulations from the Bureau of Old Age and Survivors Insurance, Civil Service and 
Census reports, and other related materials. 

1953, in every instance by a considerably greater figure for the Ten- 
nessee Valley and the Southeast than for the country at large. In per- 
centage terms, the employment growths of manufacturing and of sev- 
eral of the attendant high-wage activities were comparable; but in 
absolute figures, the 380,000 new workers in high-income jobs repre- 
sented an increase of nearly two new employees in trade and services 
for every one added in manufacturing. 

Civil government employment also increased substantially over the 
period 1929-1953. Combined federal, state, and local government em- 
ployment increased from go,ooo in 1929 to 196,000 in 1953. The fed- 
eral component of this total was about 30 per cent. Seventy per cent 
therefore was accounted for by state and local employment in educa- 
tion, highway construction and maintenance, utilities, health and hos- 
pital service, conservation, and other like fields associated with the 
concept of service to citizens. 

The significance of the rapid industrialization of the Valley for the 
individual employee may be grasped from one striking statistic: in 


Twenty Years of TVA 

1933 per capita income in the Valley was 44 per cent of the national 
average; in 1953 it was 61 per cent. The relative improvement in the 
position of the Valley workman therefore was 39 per cent. 

Problems of Continuing Industrialization 

Progress in the industrialization of the Valley, with its 
consequent broadening of direct and associated employment oppor- 
tunities, has been noteworthy since 1933; yet note must be taken of a 
disquieting trend in population and labor movement. Most of the in- 
dustrial expansion occurred in the decade 1940-1950, during which 
there was a net outmigration from the Valley of 700,000 persons, or 64 
per cent of the natural increase in population for the decade. At the 
same time, the region's labor force experienced the shifts indicated in 
the following chart: 

Chart V 
Growth of the Valley Region's Labor Force 


Source of Workers 
for New Jobs 

Pattern of 


Workers Leaving 


New Entrants to 
Labor Market 

Unemployed 1940 
Re-employed by 1950 

685,000 = 


Increase in 
Nonfarm Jobs 


Net Loss to 
Armed Forces 


Net Outmigration 
of Workers 

The net outmigration of 700,000 persons, including 256,000 workers, 
reflected a number of factors, among them economic opportunities 
outside the region and regional limitations on industrial employment 
for Negroes. Perhaps the most significant single factor underlying the 
migration, however, was the inability of the Valley's industrial struc- 
ture to give employment to all those in want of work in the region. 
In other words, industrial expansion, though great, has not been suffi- 

Economic Development 231 

cient to make full use of the available manpower. Herein lies the most 
compelling single need for continuing industrialization, for if the re- 
gion is to retain the most productive members of its population, non- 
farm industrial activity must be stepped up considerably over its pres- 
ent pace. Industrial growth has been great, but it has been neither 
enough nor fast enough. 

Further and more rapid industrial growth therefore is imperative. 
At the same time, it must be recognized that the process of industrial- 
ization produces challenging problems of its own which the region 
must be aware of and must be prepared to meet as they develop. The 
influx of large numbers of rural dwellers into urban centers will ne- 
cessitate many adjustments, both for the rural migrants and for the 
urban community. On the physical side, expansion of community fa- 
cilities, schools, hospitals, recreational areas, and municipal services 
of many types will be required to accommodate the new and growing 
urban population. In the new industrial centers, such as Calvert City, 
Kentucky, and even in the larger urban centers which must absorb 
the impact of a major industrial expansion, such as Paducah, Ken- 
tucky, with its atomic energy plant, these problems of adjustment can 
assume serious proportions. 

The immediate problem of providing physical facilities is difficult, 
but is one which can be ironed out. There are other potential con- 
flicts of attitudes and relationships in the atmosphere which pervades 
a rapidly growing industrial community which will require a great 
deal of attention. These problems of adjustment and adaptation must 
ultimately be resolved by the local inhabitants, who, however, need 
all the assistance they can muster from whatever source. Among the 
difficulties posed by the sudden imposition of an urban-industrial sys- 
tem upon a rural-agricultural economy, none perhaps is more serious 
than that of the relations between labor and management. The task 
of developing native talent for successful labor-management relations, 
for example, is one toward whose achievement the universities of the 
region can make a significant contribution. By a program for the train- 
ing of both labor and management they can, in part at least, compen- 
sate for the lack of experience and tradition in labor-management 
relations in the region. The industrialization of the region, which has 
proceeded at a rate relatively too slow in terms of the needs of the 
underemployed, nevertheless, appears to have moved faster than lo- 
cal attitudes and tempers. The adaptation of industry to regional 
idiosyncrasies and of the people to an industrial way of life presents 
a basic problem in the industrialization of the Valley which thus 
far remains largely unresolved. 

Chapter 15 

TVA and State and Local 

By Lawrence L. Durisch 

lo many observers the Tennessee Valley Author- 
ity program is most interesting and significant when viewed as an ex- 
periment in intergovernmental relations. Some see, or profess to see, a 
federal regional development agency as a threat to state and local 
government. Others perceive in TVA an improved form of federal- 
state co-operation that is demonstrating the flexibility as well as the 
vitality of our basic federalism. Most observers will agree as to the 
importance of the subject matter of the experiment, for the complexi- 
ties of intergovernmental relations in resource development are ex- 
ceeded by those in few other subject fields. The descriptions of spe- 
cific activities in earlier essays have served to illustrate the diverse na- 
ture of the intergovernmental problems encountered by TVA. They 
have called attention to the nature and extent of common action in 
the regional program — such phrases as "co-operative administration," 
"joint agreement," and "collaborative approach" have appeared fre- 
quently. It is the purpose here to consider the more general implica- 
tions of TVA's relations with the governments of the Valley. 

Natural Resources and Government 

In 1909 President Theodore Roosevelt called the gov- 
ernors of the various states together to discuss programs for the de- 
velopment of natural resources. The very term "conservation" was an 
outgrowth of this conference. Every President since Theodore Roose- 
velt has been faced with problems of conservation of natural resources 
and of federal-state relations in the conservation field. In his first State 
of the Union Message President Eisenhower emphasized that resource 
development must not be considered solely the task of the federal gov- 
ernment, but is one to be shared with the states and localities. TVA 


State and Local Government 233 

is concerned not only with the conservation and utilization of natural 
resources in a great region of the United States, but also with prob- 
lems of shared responsibility among levels of government. 

There is much to suggest that the men who shaped the Tennessee 
Valley Authority Act of 1933 deliberately sought to give new dimen- 
sions to federal-state co-operation. The statutory provisions for the 
sale of electric power and for the experimental use of fertilizer specif- 
ically call for participation by state and local agencies. Section 22 of 
the Act authorizes intergovernmental participation in making surveys 
and plans for the Tennessee basin and adjoining territory. The rec- 
ommendations resulting from such studies are to be directed not only 
to Congress but to the several states as well. The statute further pro- 
vided that the headquarters of the corporation, the point at which 
administrative decisions would be made, should be established within 
the Tennessee Valley region. This provision was undoubtedly in- 
tended to make it easier for TVA to obtain local understanding of its 
program and to secure regional participation in numerous specific un- 
dertakings. In a very real sense TVA was expected to provide a work- 
ing demonstration of co-operation and partnership in resource devel- 
opment, a principle that is currently receiving emphasis in many 

TVA, seeking to carry out these and other statutory directions for 
co-operative administration, established the major part of its activi- 
ties on the basis of wide regional participation. The co-operative na- 
ture of the unfolding program was noted in the 1936 annual report 
in the following statement: 

The planning of the river's future is entrusted to the TVA. The plan- 
ning of the Valley's future must be the democratic labor of many agencies 
and individuals, and final success is as much a matter of general initiative 
as of general consent. 

By statutory provision and by administrative interpretation, state 
and local governments are called upon to play an increasingly impor- 
tant role in the regional program. The concept of states' rights has 
long been cherished among the Tennessee Valley states. Consistent 
with it, but presently more useful, is the idea of responsibility and lead- 
ership in those aspects of resource development which properly fall 
to the states in an orderly apportionment of the tasks of government. 
If the states think positively in terms of opportunities and responsibil- 
ities, rather than defensively in terms only of rights, it is possible to 
employ more constructively all the resources of government — federal, 
state, and local — in needed and proper developmental activities. The 

234 Twenty Years of TVA 

TVA is dedicated to a collaborative attack on problems of regional 

The Tennessee Valley is made up of parts of seven southeastern 
states — Alabama, Kentucky, Mississippi, North Carolina, Tennessee, 
Georgia, and Virginia. Over half of the area of Tennessee, but less 
than one per cent of Mississippi, is contained in the watershed. The 
proportions of the other five states within the Valley are between 
these two extremes. The TVA has a number of program relations 
with each of the seven, and the group is often identified as the Ten- 
nessee Valley states. The region served by TVA-generated electric 
power embraces 201 counties, which in turn contain some 130 incor- 
porated urban places, that is, places of 2,500 or more population. The 
seven states, 201 counties, and approximately 130 municipalities ac- 
cordingly represent governmental units of special importance in the 
regional program. There are great differences in the administrative 
organization of the states and an even greater variety in the forms 
and practices of county government. North Carolina, for example, 
leads all states in the extent to which it has centralized in the state 
government educational and highway functions usually administered 
locally. Tennessee counties, on the other hand, do not even render 
complete financial reports to the state, and local officials possess an 
unusual degree of autonomy in many important fields. All the custom- 
ary types of municipal government exist in the area, with a number 
of unusual modifications and variations. The use of private acts and 
special local legislation is widespread in the region, and many city 
charters are the result of special acts. Needless to say, the quality of 
administration varies greatly from state to state and among govern- 
mental units in the same state. 

Co-operative Research in Government 

The Board of Directors of TVA discovered early that 
it needed to know a great deal about state and local government in the 
area. The Board found also that the governmental picture was quite 
complex and that such generalized information as was available would 
not adequately serve as a basis for important decisions. One of the 
early steps taken by the Board therefore was to authorize a program 
of research in state and local government. Some of the studies were 
designed for internal TVA use, and were made by staff personnel. In 
addition it was decided that TVA should actively encourage and par- 
ticipate in a program of joint research in government with universi- 
ties in the Valley states. 

State and Local Government 235 

One of the first co-operative research arrangements resulted in a 
series of studies of municipal government and administration. TVA 
was ready to contract with municipal governments for the retail dis- 
tribution of part of the electric power it generated. The municipali- 
ties, along with rural co-operatives, were designated as preference 
customers by the TVA Act. Accordingly, it was important that TVA 
have information about tax rates, assessed values, bonded indebted- 
ness, forms of government, and administrative organization and prac- 
tices of the municipalities within the power service area. In most of 
the Valley states adequate studies of municipal government and ad- 
ministration were not then available. TVA had on its staff research 
personnel competent to make the needed studies. However, instead of 
using its own staff and recruiting additional men who would be needed 
for such an undertaking, TVA contracted with a university or other 
agency in each of several states to undertake a study for it. The con- 
duct of municipal studies in this manner had several advantages. 
First, the research was done by university personnel, whose capacity 
for service was broadened by the first-hand contact with municipal 
government which the studies afforded. Second, those responsible for 
the studies either already had or could acquire a knowledge of local 
variations in organization and practice. Third, the jointly sponsored 
projects gave research in municipal government a decided stimulus 
throughout the region. Fourth, the TVA was spared the necessity of 
augmenting its staff for a series of special studies. This first research, 
involving the TVA and the universities of half a dozen of the Valley 
states, served as the prototype for a number of subsequent undertak- 

Another type of co-operative relationship was initiated to meet 
problems arising out of reservoir construction. The flooding of reser- 
voir areas made many community adjustments necessary in order 
both to meet emergencies and to take advantage of opportunities 
which were created. This may be illustrated by the experience of 
Guntersville, Alabama. In 1938, the water rising behind TVA's Gun- 
tersville Dam transformed a small rural trading center into a river 
port; but in the process low-lying streets, businesses and industrial es- 
tablishments, and sewerage and water lines were flooded. The rural 
trade area and the highways which served it were disrupted. Many 
problems of local planning pressed for solution at the same time that 
new opportunities appeared. It was essential that the community 
have technical help to assist it in solving these problems. 

To meet this and similar situations TVA entered into co-operative 
arrangements with state planning agencies by which technical assist- 

236 Twenty Years of TVA 

ance was channeled to local communities. Thus TVA contracted with 
the Alabama State Planning Commission to furnish assistance to Gun- 
tersville. TVA supplied some funds to the state for technical staff, 
and at the same time made its own technicians available through the 
State Planning Commission. The local communities benefited from 
technical assistance from state sources; TVA in turn received tangible 
assistance in the solution of reservoir adjustment problems, for which 
it had some responsibility. The most extensive co-operative programs 
involving community adjustment have been carried on in Alabama, 
Tennessee, and Kentucky. 

It was important that TVA should establish working relationships 
with state planning agencies early in its program. Because of the 
broad orientation of such organizations and because of the nature of 
their own responsibilities, these agencies are concerned with many 
TVA program activities. Planning commissions provide a natural 
point of contact and afford an unusual opportunity for joint ap- 
proaches to many problems. Although not all of the Tennessee Valley 
states have planning agencies, those which exist are an important 
factor in the co-operative pattern which has developed. 

As the regional resource development program progressed, more 
attention was given to the organization and operation of state resource 
agencies. A research project which examined state administration of 
natural resources was planned and carried out jointly by TVA and the 
state universities. Each of the co-operating universities prepared and 
published a research report for its state. TVA staff members sum- 
marized the regional findings in a volume which was printed at the 
University of Alabama in a unique publishing arrangement, partici- 
pated in by the University of Alabama Press, the University of Georgia 
Press, the University of Mississippi (Bureau of Public Administra- 
tion), the University of South Carolina Press, and the University of 
Tennessee Press. This project established a pattern of co-operative re- 
search in public administration that has been continued by the TVA 
and the universities through ten years and half a dozen major research 
projects. TVA supplied part of the funds to make the initial project 
possible; since that time each university has financed its own partici- 
pation in the regional undertaking. 

Regional research and education in public administration has as- 
sumed many forms. The TVA has been active in the program from 
its beginning, both as stimulator in its initial phases and as participant 
throughout. The university of each of the Valley states now has a bu- 
reau of public administration (or equivalent), and several of these 
organizations were established in partial response to the needs un- 

State and Local Government 237 

covered by the TVA in its quest for information about government 
in the region. 1 

Bases of Understanding 

In order to establish effective working relationships, 
it is axiomatic that there must be common interests and sympathy 
with the objectives to be achieved. Thus municipal governments must 
be interested in supplying their citizens with electric power at low 
rates and under conditions which promote wide use; counties must be 
concerned with forest fire protection, with soil erosion, with small 
watershed development; states must seek to promote the recreational 
and industrial use of the reservoirs; government at all levels must be 
concerned with stream pollution control, domestic water supply, and 
so on through a long list of program objectives. 

It is necessary also that the powers and limitations of the parties to 
co-operative arrangements be clearly understood. The states and local 
governments must realize, for example, that TVA must always give 
consideration to factors of national interest which at times may not be 
identical with regional or local interest. The people of the region 
must remember also that TVA is an agency of limited powers, that it 
lacks the statutory authorization to do many things related to its gen- 
eral program objectives that seem desirable. In recent years the re- 
gion has needed increasingly to remind itself that Congressional ap- 
propriations to TVA for resource development activities, never very 
large, have been quite limited. In fiscal year 1953, TVA had author- 
ized expenditures for resource development of less than $1,500,000, 
compared with over $7,000,000 in fiscal 1947. This means that TVA 
assistance cannot be as extensive as it once was, that state and local 
governments must bear a larger share of the costs of co-operative ac- 
tivities designed to further regional development. 

The regional agency for its part must realize that state and local 
governments also have limitations. It is not always politically feasible 
for the states to initiate changes in governmental organization which 
objective study may indicate to be desirable, even though such changes 
would improve resource development programs. Tradition, official 
and public apathy, and financial considerations may delay change for 
years. Further, state and local governments in the region, in common 
with governments everywhere, must allocate their limited funds 
among many competing programs. Among these the care and devel- 

iLee S. Greene, "Regional Research and Training in Public Administration," 
Public Administration Review, VII (Autumn, 1947), 245-253. 

238 Twenty Years of TVA 

opment of natural resources in the past has been neither the most 
articulate nor the most insistent. Education, highways, and public 
welfare are far more pressing and expensive functions of state and 
local government. Per capita incomes in the seven Tennessee Valley 
states are from 60 to 65 per cent of the national average, and revenues 
available to pay for the services of government are correspondingly 
low. With 17 per cent of the nation's children, the seven states have 
only 10 per cent of the nation's income. In spite of a tax effort which, 
in terms of percentage of individual income, was equal to that of 
other parts of the nation, the seven states in 1950 were able to provide 
per pupil expenditures of only $167 as compared with expenditures 
of $327 per pupil for the remaining 41 states. Similarly unfavorable 
financial conditions prevail with regard to highways and public wel- 

In these circumstances it is noteworthy that the seven states have 
increased the amount of state funds going into resource development 
from less than $6,000,000 in 1934 to over $52,000,000 in 1953. The 
care of the soil, forests, water, mineral, and wildlife resources is among 
the most constructive ways of providing a foundation for increased 
income and wealth. Even where this is recognized, limitations of fiscal 
capacity and the pressure of other governmental needs still serve to 
severely restrict resource development activities in each of the seven 
states. The realities of public finance will continue to condition both 
direct state and local programs and co-operative activities in the field 
of resource development for many years to come. 

Some Special Problems 

Among the problems in intergovernmental relations 
encountered by TVA none have been more urgent than those involv- 
ing tax payments or payments in lieu of taxes. As a federal agency 
TVA is immune from state and local taxation, unless this immunity is 
waived by the Congress. Congress has not taken this action and TVA 
has never seen fit to recommend that it do so. The original TVA Act 
did provide for a payment in lieu of state and local taxes of five per 
cent of the gross proceeds from the sale of hydroelectric power, to be 
divided between the states of Alabama and Tennessee on the basis 
of place of generation. As the regional program expanded into other 
states and property formerly taxed was acquired by TVA in each, the 
provisions of the original act became increasingly inadequate. Fur- 
thermore, experience demonstrated that the place of generation of 
hydro power alone is not a satisfactory criterion for allocation of a 

State and Local Government 239 

payment in lieu of taxes by a unified power system which includes a 
number of interconnected steam as well as hydro plants. 

An important development in the handling of in-lieu payment is- 
sues was the decision to hold a series of conferences with state officials 
for the purpose of drawing up proposals for modifying the in-lieu pay- 
ment provisions of the TVA Act. These discussions were not carried 
out in a formal or routine manner. They represented an earnest at- 
tempt to ascertain the thinking of state officials, together with a desire 
to inform these officials and the general public of the nature of the 
problems involved in payments in lieu of taxes by a federal agency. 
While the holding of joint discussions did not, of course, assure com- 
plete agreement, it did bring issues out in the open and give opportu- 
nity for frank discussion. The conferences helped produce a mutual 
appreciation of and respect for the position and problems of the re- 
spective parties. For TVA the discussions provided an additional dem- 
onstration of the value of an intergovernmental approach, an ap- 
proach that has been used for many problems other than those re- 
lating to payments in lieu of taxes. 

As a result of joint study and conference on in-lieu tax problems, 
the states and TVA were able to go to Congress agreed upon a con- 
crete proposal for an amendment to the TVA Act. The proposal, 
which Congress subsequently approved, provides for an in-lieu pay- 
ment of 5 per cent of the gross revenues from the sale of power. This 
payment is divided among the seven states on the basis of two factors, 
location of power property and place of power sale. In 1953 TVA dis- 
tributed $3,418,000 to the seven states under this formula. The co- 
operatives and municipalities which distribute TVA power also make 
tax or in-lieu payments. In 1953 these distributor payments equaled 
$4,973,154, for a combined total of $8,391,154. 

The payment provision has been received with general approval 
in the Tennessee Valley region. The fact that there was regional par- 
ticipation in arriving at a decision was an important factor in secur- 
ing both understanding and approval. TVA's payments in lieu of 
taxes have been criticized in some quarters as being too large, in oth- 
ers as being too small; and there is no objective answer to the question 
of adequacy. Perhaps the most meaningful test that can be applied to 
TVA's system of payments in lieu of taxes is a pragmatic one: does it 
work to the satisfaction of the parties principally concerned? Does it 
meet the problems it was designed to meet? The answer to both 
clearly is affirmative. 

TVA is under no illusion that it has found a permanent solution 
to all the complex problems of federal payments in lieu of taxes, or 

240 Twenty Years of TV A 

even to those related directly to its own activities. TVA does believe 
that it has developed sound procedures for exploring and considering 
such problems. And procedures for co-operatively seeking solutions to 
problems of our changing federalism have in themselves an impor- 
tance which transcends the specific subject being considered. 

Another problem that is being approached on a co-operative basis 
is that of local flood damage. One purpose of the system of dams and 
reservoirs TVA has built is to reduce the height of major floods on the 
Tennessee and the lower Ohio and Mississippi Rivers. The system 
does not solve many problems of local flooding, for which small 
branches or tributary streams are responsible. Such flood problems 
are traditionally approached by the construction of dykes and other 
protective works. Sometimes the benefits of proposed undertakings in 
this field do not justify the costs involved. In such cases less expensive 
alternatives may have to be considered. TVA has encouraged state 
and local planning commissions to make flood damage prevention an 
integral part of their program and in this connection to use the de- 
vices and techniques available to them. 

A program of flood damage prevention calls for recognition of 
flood plains as a part of the stream, and for fixing standards of occu- 
pancy of areas subject to periodic flooding that are related to the haz- 
ards inherent in their location. For TVA the program entails the sys- 
tematic collection and analysis of flood data, which is made available 
for use by planning commissions and other agencies of state and local 
government. For the communities it involves utilization of this infor- 
mation in adjusting land use patterns and in regulating the conditions 
under which buildings may be erected in critical areas. It involves also 
decisions as to the basis on which municipal services will be extended 
to areas subject to flooding. TVA has sought for many years to en- 
courage the Tennessee Valley states first to create and then to 
strengthen state planning agencies, and TVA has a long history of 
working with such agencies. Further collaboration in planning for 
flood damage prevention was therefore a natural development. It is 
significant that a planning approach to problems of local flooding is 
now being inaugurated on a region-wide basis. The program is still in 
its initial stages, but the results are already of nationwide interest. 

For a number of years TVA has pointed out that the waters of the 
Tennessee River are still relatively unpolluted, and that water quality 
will greatly influence future water use. The seven states have evi- 
denced great interest in protecting water quality, and each has given 
legislative and administrative attention to the matter. Action by indi- 
vidual states alone, however, is not sufficient to control pollution in 

State and Local Government 241 

a large interstate river. At the present time the seven states are in the 
process of ratifying an interstate compact designed to control pollu- 
tion on the Tennessee River. The interstate compact device is some- 
times viewed as a substitute for a federal regional development agency 
such as TVA. The Tennessee Valley states have seen a place for both 
a federal regional development agency (the TVA) and interstate com- 
pacts; and such compacts are increasingly a part of the intergovern- 
mental relations of the region. Compacts in the fields of education 
and forest fire prevention are already in existence, and others are in 
the stage of negotiation. The prospective pollution control compact, 
however, is directly supplemental to federal activity in developing the 
water resources of the Tennessee River. It suggests that both federal 
and state action are needed and that such action must be on a contin- 
uing basis, if the region is to fully use its extensive water resources. 

Appraisal and Conclusion 

It is difficult if not impossible adequately to appraise 
the effects of the TVA on government in the region. Most of the effects 
are intangible, and do not lend themselves to exact measurement. It 
is perhaps more meaningful to think in terms of the part the various 
levels of government have played in the total developmental picture 
rather than in terms of precise and measurable effects. Certainly in 
this respect it can be noted that the functions of state and local gov- 
ernment in the Valley have expanded greatly since 1933. But as the 
services of government have increased, so have fiscal problems and 
budget difficulties. This should occasion no surprise, since the resi- 
dents of the Valley, like free people everywhere, have both a growing 
capacity to consume governmental services and the political means of 
expressing an instinctive aversion to new or increased taxes. 

State and local governments in the seven Valley states are now col- 
lecting nearly $2,000,000,000 a year in taxes. Additional revenues from 
federal aid and charges for services raise the total by approximately 
$700,000,000. State and local taxes in the seven states represent ap- 
proximately 8 per cent of individual income payments. (Average per 
capita income in the seven states, it must be recalled, is still only two- 
thirds of that for the nation.) 

In the major fields of state and local action, the public service ex- 
pectations of the people tend more and more to conform to national 
standards than to the traditional level set by state or regional income, 
with the result that public pressures for increased services mount 
steadily. Nevertheless the governments of the region, in spite of severe 

242 Twenty Years of TVA 

fiscal limitations, are increasing their expenditures for resource devel- 
opment programs. Expanded activity in forestry, agriculture, parks, 
and recreation programs, as well as public health, industrial develop- 
ment, and planning, has been recorded. One test of the regional pro- 
gram, and a very important one, is found in the willingness of the 
state and local governments to support more vigorous activities along 
these lines. A practical consideration is the fiscal and administrative 
ability to carry on expanded resource programs. 

Little or no evidence has developed to support the fear that TVA 
would weaken state and local institutions. This foreboding, often 
heard at the time TVA was established, is not seriously advanced in 
responsible quarters today. On the contrary, the observation is now 
frequently made that state and local government is stronger, better 
conducted, and more vital as a force in regional development because 
of the presence in the region of TVA. The states of the Tennessee 
Valley have learned that they can work together quite effectively 
through TVA in the development of their natural resources, and with- 
out any loss of their sovereign rights. They have found no incompati- 
bility between devotion to principles of states' rights and co-operation 
with the Tennessee Valley Authority, nor have they discovered in 
TVA a threat to the position or the legitimate powers of the states. 

In 1944 the St. Louis Post-Dispatch polled the seven governors re- 
garding the benefits which the Tennessee Valley Authority had 
brought to their respective states. Aside from material benefits, which 
they noted, the governors were unanimous in acclaiming the co-opera- 
tive spirit of TVA and its avoidance of arbitrary methods. Eight years 
later The Knoxville News-Sentinel repeated the survey. An entirely 
new set of governors again agreed in their approval of the conduct of 
the regional program. The News-Sentinel summarized the views of 
the governors in these words: 

The governors deny the two charges most frequently made against the 
TVA . . . that such a Federal agency is a "super-state" which violates 
States' Rights, and that it robs the states of tax revenues. They also testify 
unanimously to the co-operative spirit of the agency and its avoidance of 
high-handed methods and agree that the rights and interest of the states 
. . . have been strengthened by TVA's operations. 2 

This is not to imply that there have not been points of difference 
between TVA and the agencies of state and local government; there 
are still many problems to be solved, and some of them involve ques- 
tions of major policy. But without exception such differences have 

2 The Knoxville News-Sentinel, June 29, 1952. 

State and Local Government 243 

been approached in a spirit of mutual respect and with traditions and 
patterns of co-operative action already established. The TVA and the 
state and local governments must continue to work at and find solu- 
tions for problems of intergovernmental relations. The willingness 
and ability of federal, state, and local agencies to do this lies at the 
very center of American federalism. Federalism is a matter of adminis- 
tration as well as of legislation and constitutional change. 

A co-operative approach to regional resource development is in- 
digenous in the philosophy and practice of TVA, and the story of 
actual operations indicates that the approach has done much to 
strengthen the position of state and local government both in the re- 
gion and in the regional program. The experience of the Tennessee 
Valley in a wide variety of program activities supports the observation 
made at the beginning of this paper: TVA is particularly significant 
when viewed as an experiment in intergovernmental relations, and 
when considered as a large scale effort to make our federal system 
function more effectively in the increasingly important field of re- 
source development. 

Chapter 16 

TVA in Its Larger Setting 

By Edward A. Ackerman 

1he Tennessee valley authority stands alone as a 
regional resource organization in the United States. Repeated efforts 
have been made to establish similar organizations elsewhere in the 
country, but TVA today remains the only integrated regional resource 
development agency. However, while TVA may be isolated as an or- 
ganization its influence has been widespread. Many United States re- 
source development operations have profited from TVA experience, 
and the pattern of such activities bears the unmistakable imprint of 
TVA innovations. 

The principles and practices of two decades which have been 
found useful elsewhere may be classified into two primary groups. First, 
there are those technical innovations, mostly of a scientific or engi- 
neering character, which have found wide acceptance; second, there 
are the contributions which TVA has made to the art of governance 
as an agency of regional administration. 

Technical and Scientific Contributions 

TVA has made a number of contributions to the tech- 
nical and scientific life of the country. They range from improved engi- 
neering procedures to new scientific formulae, from high dams to pat- 
ented machines and equipment, and from new uses for forest products 
to new community library services. Essentially, all deal directly or in- 
directly with the development and improved utilization of natural 
resources for the good of man. 

Among all of TVA's activities, the techniques of multiple-purpose 
river development and integrated water control management on a 
regional basis have had the most widespread recognition outside the 
Valley. After twenty years few engineers of note and no recognized 
specialist on river basin planning would think of approaching the 
development of a river valley on any other than an integrated multi- 


The Larger Setting 245 

pie-purpose basis. The principle is now firmly established in the oper- 
ating techniques of the other two important development agencies in 
the federal government, the Department of the Interior and the Corps 
of Engineers. 

Most of the important plans for stream and watershed develop- 
ment now relate to western United States. The federal government, in 
co-operation with state governments and local interests, has important 
plans drafted (either authorized or before the Congress) for the Co- 
lumbia system in the Northwest, the Missouri Basin, the Central Val- 
ley of California, and the Colorado. These combined systems include 
a sizable part of the land area of the United States. In every instance 
multiple-purpose development and integrated water control are con- 
sidered part of the plan. On the Columbia and the Missouri, and in 
the Central Valley, great multiple-purpose construction programs 
have either been completed or are under way implementing these 
plans. In addition, technical committees are now exploring the possi- 
bilities of regional development of water and land resources in the 
Arkansas-Red-White basins of the Southwest and the river basins of 
New England. In both areas the committees are so constituted that 
acceptance of the idea of integrated multiple-purpose planning is 
hardly open to question. 

Of notable importance has been TVA's experience as a single wa- 
ter master on the Tennessee River. From the beginning TVA has fol- 
lowed the policy of looking upon all waters in the basin as a single 
problem, wherever they may happen to fall, and has brought the 
principal surface waters in the basin under a single, integrated con- 
trol. The value of this feature of TVA operations has not been so 
widely realized as the integrated planning and development of the 
river. The actual economies and the avoidance of administrative 
frustration which accompany application of the single water master 
principle are now commencing to command the attention of those in- 
terested in river development elsewhere in the nation. The only major 
system on which development has proceeded far enough to make the 
matter of the single water master of immediate concern is the Colum- 
bia. The idea, at least, was accepted as early as 1951 by most members 
of the Columbia Basin Inter-Agency Committee in the development 
of that basin. 

Thought relating to techniques of managing the Missouri is show- 
ing a course parallel to that emerging for the Columbia. While the de- 
velopment of the Missouri is not so far along as that of the Columbia, 
even confirmed states' rights proponents in that region have admitted 
the logic of the single water master. The report of the Missouri Basin 

246 Twenty Years of TVA 

Survey Commission, which included representatives of both national 
political parties, strongly endorsed the principle of unified water con- 
trol. In the basins in which the Department of the Interior has had 
the major responsibility for planning and development, like the Col- 
orado, there has been no question as to the value of this technique. 

The secondary lessons to be learned from TVA's experience in 
multiple-purpose river development are many. For illustration, three 
will suffice for mention here. The first relates to public health, and 
the subject of principal concern is malaria. Before the TVA system 
was commenced, the Southeast had had some unpleasant experiences 
with increases in malaria resulting from the creation of reservoirs. The 
Santee-Cooper Reservoir in South Carolina was a notable case. It is 
not too much to say that if TVA had not solved the malaria problem, 
its coming might have marked the end rather than the beginning of 
extensive reservoir development in the Southeast. As it is, TVA has 
developed a malaria control system which does not add unduly to 
the costs of reservoir operation, and which is compatible with the ma- 
jor purposes of reservoir construction and with the propagation of 
fish and wildlife as well. This is a professional achievement which 
since the late thirties has been noted wherever reservoirs have been 
constructed in regions where the Anopheles mosquito threatens. 

Fish and wildlife is another subsidiary area in which TVA experi- 
ence has been of national use. Before experience with the extensive 
system established on the Tennessee, many conservation interests had 
maintained that large reservoirs on flowing streams meant the end of 
effective fish reproduction. The fate of fish and wildlife was antici- 
pated as a real problem when the TVA reservoirs came into existence, 
and extensive preparations were made through provision for restock- 
ing to see that fish did not disappear from the river. As it turned out, 
these precautions proved unnecessary. The hatcheries long since have 
closed operation for the Tennessee, and natural reproduction sup- 
ports both commercial fishing and a high level of game fishing. While 
this experience does not have universal application, it has effectively 
put to rest many of the old arguments about "cross purpose" reser- 
voirs. It has been taken as applicable throughout much of the eastern 
United States. 

A final example relates to the problem encountered in developing 
reservoirs in densely settled country. Another of the objections to 
multiple-purpose reservoir creation has always lain in the hardship 
caused by the dislocations resulting from water storage in a valley 
where communities and farms may have been located for generations. 

The Larger Setting 247 

Because of the fragmentary planning which generally had been de- 
voted to the solution of this social problem, it had often been regarded 
as a major obstacle to the creation of large reservoirs in densely set- 
tled country. Through careful planning and analysis, TVA has dem- 
onstrated that this problem can be handled economically and equi- 
tably even under adverse conditions. Other agencies faced with similar 
problems have made careful studies of what TVA has done. The most 
recent study of TVA methods was undertaken for the Missouri Basin. 

In the domain of public power TVA experience offers a number 
of lessons for wider consumption. Among the most significant of these 
is its demonstration of the value of a single, closely integrated electric 
power system distributing the energy from a number of hydroelectric 
and steam plants over an entire region. The stability and the cost ad- 
vantages of a single large distribution network were first made mani- 
fest in TVA's experience. The same principle was later illustrated by 
the Bonneville Power Administration's distribution network in the 

Another major area in which TVA's experience in public power 
has yielded dividends for the whole country concerns the cost and use 
of electricity, upon which TVA's influence is observable in at least 
three important particulars. First, the experience of the Tennessee 
Valley has had significant effects on the nation's electricity rate struc- 
ture. To comprehend these effects one need only examine the range of 
electricity rates from 1935 to 1952. There has been a marked reduc- 
tion in rates both throughout the country and, more especially, in the 
Southeast. Several factors combined to effect this reduction, but one of 
the most significant unquestionably was the experience of the Tennes- 
see Valley Authority. 

Second, TVA from its beginning has made optimistic forecasts of 
the potential electricity market. For at least the first ten years of its 
life, the TVA was criticized continually by private utility spokesmen 
for constructing capacity for which, to quote an oft-repeated charge, 
"there could be no possible use within this generation." Lately, think- 
ing on this subject has undergone a marked change; the President's 
Materials Policy Commission, to illustrate, reported estimated needs 
for electric energy for the country which are notably at variance with 
the traditionally cautious estimates of the utility industry. The fore- 
casts made by the TVA almost twenty years ago appear in retrospect 
to have been imaginative but wholly realistic. They have come to 
provide the background for national thinking about the potential 
need for electricity. 

248 Twenty Years of TVA 

Third, and as intimated above, there has been a remarkable in- 
crease in the use of electricity by individual consumers throughout 
the country as a whole but more especially in the Tennessee Valley. 
This increase has been notable on the farms, few of which had elec- 
tricity twenty years ago but most of which are now electrified. Credit 
for this trend can go to the Rural Electrification Administration, 
which provided the financial means for bringing electricity to the 
farms; to the local electricity distribution co-operatives for their initia- 
tive, interest, and good management; and to the TVA, which low- 
ered the cost of electricity to the point where the farmers could af- 
ford it. 

It is fitting that this summary of technical and scientific contribu- 
tions conclude with reference to the only major activity for which 
TVA was given true nationwide responsibility. Since 1933 the agency 
has been the only important publicly maintained organization for ex- 
perimenting with fertilizers; it has had the only extensive laboratories 
and pilot plant in the industry, and it has had statutory authorization 
for a countrywide fertilizer program. Given the mission of lowering 
fertilizer costs to farmers, TVA has developed concentrated commer- 
cial fertilizers which demand fewer and lower grade raw materials 
and which can be transported at lower cost than previous low-analysis 
fertilizer. Currently there are trends in the industry toward higher 
grade and lower cost fertilizers, and toward the introduction of new 
and experimental fertilizer materials. On the consumer side, there are 
trends toward much wider use of established products and toward 
adoption of experimental materials as well. For these developments, 
which are national as well as regional in scope, TVA neither deserves 
nor claims full credit. At the same time, it is not to be doubted that 
TVA's fertilizer program has made its imprint on both production 
and consumption patterns, and so has had an accelerating influence 
on current trends. 

Contributions to the Art of Administration 

The lessons of TVA experience for public adminis- 
tration are likely to be obscured, and on occasion even to be lost alto- 
gether, in the public debate of the various issues of high policy in 
which the agency is involved. Public power, alleged regional favor- 
itism, alleged sectional competition — the controversy surrounding 
these and like issues provides the environment in which the Tennessee 
Valley Authority too frequently is judged. Above and beyond this 

The Larger Setting 249 

controversy, the TVA for twenty years has conducted its affairs in a 
manner which skilled observers repeatedly have reported to be both 
highly moral and highly effective. 

TVA's organizational forms have provided several significant in- 
novations for a public agency. Among them may be cited: (1) policy 
formation by a small (three-man) but very active Board of Directors, 
examining the problems of the organization on a day-to-day basis; (2) 
decentralization of routine administration in divisions and offices, 
but centralization of policy implementation in a general manager 
with full authority for co-ordination; (3) an imaginative personnel 
system, recognizing the value of experiment and incentive, avoiding 
the freezing of incompetence; (4) a rigorous but simplified account- 
ing and records system. Other agencies in the federal government 
have examined all of these features and others, making use of appli- 
cable TVA experience. 

The spirit in which TVA has undertaken the responsibilities im- 
posed upon it is just as important as its new forms. The TVA was 
charged by the Act of 1933 with responsibility for the development of 
the Tennessee Valley. It might have proceeded at once with a program 
limited to physical construction and it would have made a more im- 
posing record had it done so. It chose instead to begin with the people 
of the Valley. What was their stake in the development which the 
Congress had ordered? What immediate steps could be taken to meet 
their needs? How could their energies be enlisted and utilized day by 
day in the whole Valley enterprise? How could the end sought be 
made to serve them all along the way? This conviction lay behind all 
subsequent policy decisions: that means were equally as important as 
ends in TVA's affairs. 

This preoccupation has had at least three significant results for 
TVA's methods of operation. First, it has kept in the forefront of pro- 
gram planning the effects of a proposed action on the people in- 
volved. This concern found expression in use of the force account, 
which made physical construction as meaningful as possible to the 
advancement of the region's people. It found further expression in 
TVA's emphasis on the physical well-being of its workmen and their 
families, and in the care with which families and communities were 
relocated prior to the flooding of the reservoirs. The malaria control 
program also was a direct outgrowth of the agency's concern for the 
welfare of the people of the Valley. 

Second, TVA's conviction that means are not less important than 
ends led to heavy reliance on local institutions, particularly those of a 

250 Twenty Years of TVA 

public character. Thus TVA has sought to carry out its programs 
wherever possible with the active co-operation and participation of 
state and local governments. In providing a means for collaboration 
whereby the governments of the Valley can join to discharge the duties 
suited to them, and in decentralizing the federal government at the 
same time so that it has direct and immediate community significance, 
TVA has pioneered in a common attack on regional problems which 
may have significance beyond regional borders. 

A third consequence of TVA's emphasis on people and methods 
finds reflection in a democratic system of internal administration. 
There is machinery which permits wide participation by rank-and- 
file employees in policy revisions or other decisions on a number of 
agency functions, like determination of wage rates and conditions of 
work. An effort is made, through both formal and informal organiza- 
tion, on one hand to provide channels for receiving and considering 
improvement suggestions from all employees and on the other to ac- 
quaint them with agency ideas and progress. The net result is an un- 
usual sense of participation and a morale throughout the organization 
which has been remarked by more than one professional observer. 

In evaluating TVA's relation to national resource development, it 
should be remembered that TVA has not been so isolated as it may 
seem superficially. Broadly conceived, the TVA is part of a stream of 
development begun many years ago, which has come to full growth 
only in the last two decades. In his last message to the Congress, Presi- 
dent Truman spoke of that stream and of TVA's part in it: 

. . . during those [twenty] years, we have changed greatly our attitudes 
toward using our lands and waters. We have learned that the mark of a 
well-managed land lies in the care a Nation gives to its rivers. ... we 
[have] demonstrated for all time the efficiency and the humanity of com- 
prehensively planned multipurpose river-basin development. ... we 
have learned the true place of electric power-generating facilities in our 
national life. . . . they are so vital that never again can we trust to hap- 
hazard planning for their construction. We know that electricity can be 
produced and sold cheaply . . . We know that large reserves of generat- 
ing capacity are vital to economic health and to national security. . . . 
TVA proved a lot of these things to us, and our works in other parts of 
the country have confirmed and extended that proof. . . . We now know 
that fertilizer can be produced and sold more cheaply than it was in the 
past. . . . We have learned that the advantages of flood control can be 
extended on a large scale through multiple-purpose reservoirs and water- 
shed improvements, aiding town and farm alike. ... we now have well 
charted the obstructions to efficient national water resource development 
of widespread benefit. . . . I . . . believe that a more certain route to 

The Larger Setting 251 

these benefits can be planned. When that is done, the Nation can build 
even more surely and more rapidly than before. 1 

International Interest in TVA 

TVA always has stressed its regional responsibilities, 
often disclaiming alleged ambitions to provide a pattern for develop- 
ment elsewhere. However, it has always received visitors cordially, and 
has assisted in limited technical consultation whenever able. The In- 
formation Office of the Tennessee Valley Authority in Knoxville, 
Tennessee, is as cosmopolitan a place as one is likely to find in this 
country. In addition to United States visitors, foreign visitors from 
almost every country in the world may be seen, from single individuals 
to large groups. Their missions vary from personal visits to official as- 
signments of a few hours' to a year's duration. In 1946 more than 500 
such foreign visitors came; by 1952 the number had grown to 2,135, 
who represented 74 different countries. 

Two features of these visits are worthy of special attention. First, 
most of the visitors come as members of groups, which more often 
than not include citizens of many countries. A recent group of 60 pro- 
fessional geographers, for example, included members from 20 differ- 
ent countries, and a graduate student group of 57 from a large Ameri- 
can university contained nationals of 22 countries. Second, most of 
TVA's foreign visitors are professional men and women; and a high 
percentage are in government service, both as political leaders and as 
administrative officials and employees. The roster of visitors has in- 
cluded members of parliaments, presidents and prime ministers, de- 
partment heads and secretaries, and many technicians and scientists in 
varied fields. 

These visitors almost uniformly are bent on serious business: they 
ask many technical questions while they are here; they return to their 
homes to send added queries by mail; and they adapt TVA practices 
to the needs of their many countries in a variety of ways. There are, 
indeed, more than a dozen river control projects in other countries 
on four continents which have drawn in some degree on TVA experi- 

Located in West Africa on a bend of the Niger River, and sepa- 
rated from the rest of the world by the Sahara Desert on three sides 
and by a rain forest on the fourth, is Timbuktu. On the Niger bend 
about Timbuktu is one of the earliest projects to be influenced by 

1 Congressional Record, 83d Cong., 1st sess., vol. 99, pt. 1 (January 19, 1953), 
pp. 43 8 -44L 

252 Twenty Years of TVA 

TVA. The Niger Valley project was actually started before 1933; after 
TVA came into operation, however, the Niger project was reorganized 
along lines suggested by the developing experience of the new agency, 
adapted to West African conditions. The vast Niger Valley has im- 
portant potentials for both power generation and agricultural pro- 

Also in Africa, near the heart of the continent, is a project which 
has been publicized as the African TVA. It is on the Victoria Nile just 
after it leaves Lake Victoria, the third largest lake in the world. The 
dam being built at Owen Falls will raise the surface of Lake Victoria 
about one meter (3.28 feet), thereby providing a storage capacity 
about four times that of the whole TVA system. The Owen Falls Dam 
can increase the irrigable area of Anglo-Egyptian Sudan by about 
1,600,000 acres. In addition, it will permit the reclaiming through 
drainage of tens of thousands of acres of swampy land in the southern 
Sudan. The integrated development of the entire Nile Valley, extend- 
ing 4,000 miles to the north, has been the subject of much discussion 
among the governments of the affected countries: Anglo-Egyptian Su- 
dan, Egypt, Ethiopia, Kenya, and Uganda. 

Probably the nearest approach to an exact copy of TVA is nearing 
completion in India. In 1947 India achieved its independence, and in 
the same year the Damodar Valley Corporation (DVC) was estab- 
lished for the Damodar River, a tributary of the Ganges. In planning 
this development the government of India secured the services of the 
former head Planning Engineer of TVA, and the Chief Engineer of 
DVC is a former TVA construction engineer. 

The successful development of the Damodar has caused India to 
consider another project of a similar nature in the same section of the 
peninsula. The Mahanadi Valley is larger than that of the Damodar, 
and it also has important multiple-purpose potentialities, particularly 
for irrigation. It therefore may be a significant means of increasing the 
scanty food supply in that needy part of India. The irrigation of about 
2,500,000 acres, installation of generating capacity of 900,000 kilowatts, 
storage for flood control, and a navigation canal are all contemplated. 
The government of the province of Orissa has had TVA under study 
as a model for its work on the Mahanadi, and an official statement 
acknowledges the TVA pattern for the development that is to take 
place there. There are in addition several other basin programs in 
India related in concept to the TVA, for example, those on the 
Ganges, the Sutlej, the Machkund, the Godavari, and the Kistna. 

A development that has been styled TVA's twin is under way in 
Australia. Three rivers are involved, the Snowy, the Murray, and a 
large tributary of the Murray, the Murrumbidgee. Part of the abun- 

The Larger Setting 253 

dant waters of the Snowy are being diverted through a series of tun- 
nels under the Australian Alps to the arid valleys of the other two 
rivers for irrigation, navigation, and power. 

The Papaloapan basin development has been called TVA, Mex- 
ican style. The Aleman Dam, named for the former President of 
Mexico, was recently completed as part of it. Before starting this de- 
velopment the Mexican government sent a staff of technical experts 
to study TVA, and members of TVA's staff have served as consultants 
to that government. 

Two projects in South America bear some imprint of the TVA 
pattern. In Venezuela, the Caroni Valley is being developed in a some- 
what different manner, but with full knowledge of TVA experience. 
In northeastern Brazil is the Sao Francisco Valley, which is several 
times the size of the Tennessee. Although it has important climatic 
handicaps, it has many interesting potentialities for development. Ir- 
rigation, flood control, and the development of electric power, along 
with programs for improved public health, may portend an important 
change in the future of this large watershed. Since one per cent of all 
Brazilian national revenues are set aside annually until 1966 for de- 
velopment of the Sao Francisco, substantial accomplishment may be 
expected. The President and other Brazilian officials have visited TVA 
to determine the applicability of its methods to the Sao Francisco, and 
TVA staff members have participated in the planning of the enter- 
prise. A Cauca Valley Authority for Colombia, which would be organ- 
ized on the TVA pattern, is being considered by the government of 

Reasons for Foreign Interest 

What are the reasons for the international interest in 
the Tennessee Valley Authority? Why have visitors come from almost 
every country in the world to study the TVA and observe its opera- 
tions? Two sets of causes may be examined, one resting on the rapidly 
changing international climate, the other on certain features and at- 
tributes of the TVA itself. 

Among the former, note must be made at once of the disintegra- 
tion of colonialism, of the attendant rise of former subject peoples, 
and of the consequent ever-swelling realization among the "have-not" 
people of the world that their material circumstances can be im- 
proved. That the lot of a majority of all people needs improvement is 
not a subject that requires elaboration here. Those who have seen a 
peasant woman tugging on a plow, men serving as the motive power 
for a pile-driver, a cemetery with half the markers devoted to chil- 

254 Twenty Years of TVA 

dren's graves, women old and toothless at thirty, will understand 
without elaboration the vast potential strength of the new and basic 
political force which has been unleashed in the world. Communism 
recognized this force long before any of the nations of the West did. 
The Fascist governments of Japan, Germany, and Italy recognized it, 
but their attempts to cope with it failed because of their completely 
selfish direction. 

Our own government has recognized it in a series of foreign assist- 
ance measures, which, beginning with the Foreign Assistance (Mar- 
shall Plan) Act in 1948, were designed to enable the free peoples of 
the world, who had been struggling desperately to maintain their free- 
dom, to secure more food and other necessities of life. Among other 
things, this legislation has financed or helped finance trips to this 
country of representatives and technicians from many foreign coun- 
tries. These visitors came — and are still coming — to study the system 
and the methods under which the American standard of living has 
reached such high levels. Many of the visitors to TVA in recent years 
have come because of the arrangements made under the foreign assist- 
ance programs, for TVA has been a part of the exhibit which the 
United States has to offer foreign observers. The foreign assistance 
legislation, of course, offers other means of help to foreign countries 
than the travels of professional observers in this country. TVA has 
shared in providing this assistance. Published technical reports, pa- 
pers, and special studies covering the various phases of TVA's pro- 
gram are furnished to interested countries upon request. Many mem- 
bers of the TVA staff have been made available for assignments 
abroad as special consultants on resource development and related 

This, then, is the environment in which international interest in 
TVA developed. In some part, it is clear, the special interest mani- 
fested in TVA has been collateral to a movement which incorporates 
in its sweep all the peoples of the free world. The common people the 
world over have abandoned, or are in the process of abandoning, the 
fatalistic attitude which the vast majority of humankind has had for 
centuries toward starvation standards of living. They seek, and they 
will find, a way to a better life. International interest in TVA is one 
by-product of their quest. 

Some Relevant Features of the TVA 

It has been suggested that the new leaders of the peo- 
ples in underdeveloped areas are interested in material things. Their 
needs are indeed starkly real: they hinge on such elemental issues as 

The Larger Setting 255 

mitigating the effects of famine and disease. These people seek re- 
sults in improved conditions of living, and if they come to the Ten- 
nessee Valley Authority for guidance it is because they believe that 
TVA's experience is relevant to their needs. There are four basic rea- 
sons for this conviction; they turn on as many features of TVA opera- 

First, TVA is a demonstration in physical accomplishment. Both 
political and professional leaders in the countries which need develop- 
ment are interested in demonstration. The problem for most of them 
is so vast that they cannot hope for rapid improvement; in fact, the 
outlook generally is for slow economic progress even in the face of 
tremendous physical effort. Large populations in relation to re- 
sources, limited capital funds, and perplexing conservational prob- 
lems make the total job a vast one. This is precisely the situation in 
which a demonstration is important. If some real, concrete accom- 
plishment can be made a symbol of hope in a country, part of the 
problem of time will have been solved. A mere project does not of 
course constitute a successful demonstration: British colonial admin- 
istration had a number of important and successful projects in India, 
but each in its turn sank into the mire of Indian demographic prob- 
lems. The needed features are regional demonstrations of results to be 
achieved from a combination of local initiative, technical compe- 
tence, and a viable organization. TVA affords such a demonstration, 
and this is one source of its appeal as a pattern. 

A second reason for the interest of professional people from for- 
eign countries lies in the size of the Valley in relation to TVA's opera- 
tions. It is small enough to be comprehensible to the average foreign 
observer, who finds in the Valley a unit which had problems com- 
parable in number and complexity with those which he knows in his 
homeland. From the point of view of integrated basin planning and 
development, the region is at the same time large enough to demon- 
strate the scope, the results, and the potentialities of co-ordinated 
multiple-purpose river basin development, and small enough to per- 
mit attention to detail at the grass roots. 

This leads to mention of a third feature of TVA operations which 
is relevant to foreign interest. As has often been observed, something 
like ninety per cent of the world's immediate problems are rural in 
character. TVA has labored for twenty years in an area preponder- 
antly rural; and many visitors are interested to learn both how TVA 
has worked in this environment and how the rural citizenry has re- 

A fourth and final feature is that the Tennessee Valley itself was 
an underdeveloped area twenty years ago, by comparison with the re- 

256 Twenty Years of TVA 

mainder of the United States. Its economy was based on agriculture 
and on the production of raw materials. The Tennessee Valley peo- 
ple's share of the revenue from finished products amounted to rela- 
tively little, a major part of the profit going to those industrially de- 
veloped regions which processed the raw materials produced in the 
Valley. Educational facilities were poor. Malnutrition was not un- 
common, and the death rate from such diseases as typhoid and tuber- 
culosis was comparatively high. Malaria was a scourge in the southern 
portion of the Valley, limiting the ability of the people to produce. 
Families were large; and since opportunities to work at good wages 
were limited, there was a steady migration of young people to the 
large industrial centers of the North. Such conditions are typical of 
what today is called the "colonial" economy of an underdeveloped 

It is not meant to suggest that the conditions which prevailed in 
the Tennessee Valley in 1933 were as distressing as those to be found 
over a large portion of the earth's surface today. There were neverthe- 
less certain parallels, and the basic differences were perhaps more in 
degree than in kind. In any event, and without foreign comparison, 
TVA came into a relatively undeveloped region twenty years ago and 
wrought changes there which make the Valley an object of interest to 
virtually every underdeveloped country in the world. Whatever TVA's 
initial base, it was not so impossibly high as to destroy the value of the 
demonstration for economically backward countries. 

In a recent major foreign policy address, President Eisenhower 
spoke of "... a fund for world aid and reconstruction ... to help 
other peoples to develop the undeveloped areas of the world (and) to 
assist all peoples to know the blessings of productive freedom." The 
ends named are those which the TVA in a modest way has sought 
these twenty years to achieve in the Tennessee Valley. If TVA's meth- 
ods are found applicable in some part to the Valleys of the Cauca, the 
Damodar, and the Sao Francisco; if regional development techniques 
are found to have a high transfer potential; then a value is added 
which TVA did not envision in the beginning and for which it did not 
consciously strive. Certainly there is an element of satisfaction to the 
TVA staff in the incidental service which their organization has been 
able to render the cause of international understanding and good will. 

Chapter i 7 
Retrospect and Prospect 

By Roscoe C. Martin 

Here ends the staff report on the first two decades of 
the Tennessee Valley Authority. The authors have told the story of a 
river brought to heel in the service of a region and its people — of dams 
to banish floods, of a new and rich and varied river commerce, of 
power in quantities undreamed of twenty years ago, of potent new fer- 
tilizers for the nation's farms, of a stand-by source of munitions for war, 
of the rejuvenation of a forest cover which had been allowed to de- 
generate into scrub trees and brush, of a healthy populace in a coun- 
try once scourged by malaria, of a rising tide of industrial develop- 
ment, of a chain of lakes which invite the people to re-acquaint 
themselves with the outdoors. 

They have told the story, too, of a federal agency unique in con- 
cept and organization — of a public corporation established by Congress 
to deal with the problems of a region; of an agency dedicated to the 
proposition that natural resources must be seen whole, and that water 
is the common element which binds these resources together; of an 
organization which, lacking the power of compulsion, has gained al- 
most universal acceptance among the people of the Valley and their 
governments through education, demonstration, and technical assist- 
ance; of a vigorous leadership whose idealism has been tempered by 
a practicality arising from intimate acquaintance with the limitations 
as well as the potentialities of the region; of a bold experiment to re- 
lax rigidities and adapt the federal system to new and unmet needs. 

The essays have dealt, then, with both substance and method, with 
both the achievements of the TVA and the procedures by which 
those achievements have been earned. Uniformly the means have been 
judged to be not less important than the ends; and even the most ma- 
terial of subjects have been alleviated by obeisance to democratic par- 
ticipation and the consent of the governed. TVA emerges from these 
essays both as an accomplishment in concrete and as a way of gov- 

The twenty-year story of the TVA stands complete where the last 


258 Twenty Years of TVA 

of the staff essays left it. It remains, in conclusion, to ask two principal 
questions. Retrospectively, how did the TVA come to be the kind 
of agency it is? In prospect, what major problems confront the TVA 
as it moves into its second twenty years? 

Choice and Chance in Public Administration 

On a day late in May of 1933 Dr. Arthur E. Morgan, 
of Antioch College, called Secretary Harold Ickes of the Department 
of the Interior by long distance telephone. 'As you know, the Presi- 
dent has just appointed me to head the new Tennessee Valley Au- 
thority," he said. "Can you let me have a couple of offices, so I can get 
under way?" Secretary Ickes proved agreeable. Dr. Morgan sent along 
a young associate to get things moving, and in a matter of days office 
space had been designated and three employees — an assistant and two 
stenographers — installed. Thus the physical origin of the Tennessee 
Valley Authority — and thus with variations the origin of almost any 
agency of government. 

The story of the TVA from that May day forward might be related 
in terms of material growth — increase in appropriations and in money 
spent, expansion in staff, acquisition of physical properties. It might 
also be told in programmatic terms — dams built, potential floods 
thwarted, power generated and sold, pine seedlings planted, new fer- 
tilizers developed and test-demonstrated. Yet again, it might be de- 
veloped against the background of the growing spirit of co-operation 
in the Valley — of arrangements which have increasingly brought to 
bear on common problems the resources of all governments, of agree- 
ments for joint action between the TVA and a great variety of private 
enterprises, of the growth of citizen participation in the manifold TVA 
program. These are appropriate areas for emphasis in tracing the de- 
velopment of an administrative agency, but they are not the areas 
chosen for examination here. The present emphasis rather is on the 
choices made by the responsible spokesmen of the Tennessee Valley 
Authority, and on the significance of these decisions for the form and 
spirit, and especially for the program, of the agency. 

On May 18, 1933, the TVA consisted of a general directive passed 
by Congress and signed into law by the President. From that day the 
TVA began to assume tangible form, first in the provision of the bare 
physical facilities essential for its existence, second in the taking of 
certain basic decisions which would determine the scope and character 
of the agency. The early decisions were of course crucial, for the em- 
bryo agency might have traveled in any of a number of directions; and 

Retrospect and Prospect 259 

it was necessary in the very beginning to chart its general course. The 
first decisions nevertheless were neither all-determining nor final; for 
on the one hand original decisions had to be modified in the light of 
unfolding experience, while on the other new problems arose con- 
stantly to demand both redefinitions of old policies and determina- 
tions of new ones. The process of decision-making therefore has been 
a continuing one throughout the life of the Tennessee Valley Author- 
ity, which is what it is in large part because of decisions made by its 
Board of Directors. 

It should be observed that no agency is ever wholly free to chart 
its course. In the case of the Tennessee Valley Authority there were 
several conditioning factors. First, the TVA Act itself, though flexible 
and in most respects general in its provisions, nevertheless was quite 
explicit on many points. Second, the President himself had some fairly 
definite ideas as to the proper field of action for the TVA. So had the 
Congress, which for years had debated the problems of the Tennessee 
Valley and (more particularly) the disposition of the Federal proper- 
ties located there. Third, the World War I installations at Muscle 
Shoals exerted a powerful influence in procuring passage of the TVA 
Act in the first instance and in shaping the program of the new agency 
in the second. Fourth, the TVA came into existence at the very depth 
of the Great Depression, and the psychology, not to mention the cate- 
gorical needs, of that era had a profound effect on TVA in its early 
years. Fifth, the depression gave way to a period of defense, which was 
followed shortly by World War II and its overwhelming require- 
ments. From 1933 to (about) 1945, therefore, the Tennessee Valley 
Authority operated in a state of almost continuing emergency which 
reduced appreciably the latitude of available choice. 

Notwithstanding these (and other like) conditioning factors, the 
Board of Directors of the Tennessee Valley Authority was called upon 
to make a number of policy decisions which determined, or at the 
least significantly affected, the course of the agency. As it steered the 
TVA along the highway indicated broadly by the statute, the Board 
came occasionally to forks in the road, where markings were indistinct 
or where alternative routes were available. It is the purpose here to 
examine a number of those basic decisions, with an eye to their sig- 
nificance for both the means and the ends of the Tennessee Valley 
Authority. 1 

1 Lawrence L. Durisch and Robert E. Lowry have discussed this subject in 
greater detail than the space available here allows. See their "The Scope and Content 
of Administrative Decision — The TVA Illustration," Public Administration Review, 
XIII, No. 4 (Autumn, 1953), 219-226. 

260 Twenty Years of TVA 

i. A problem which confronted the Board of Directors from the 
very beginning, and which required not one decision but a series of 
experimental solutions running over a period of four years, turned 
on the Board's organization for administration. The TVA Act pro- 
vided for a board of three co-ordinate members to be appointed by 
the President without differentiation of duties. One was to be desig- 
nated (by the President) as chairman, but in all substantial re- 
spects the three members were to be coequal in authority. The Board 
ran into difficulties almost at once, due principally to confusion with 
respect to the duties of its members and to the absence of a responsi- 
ble administrative head. The essay on 'Administrative Foundations" 
(above) traces the rise of the internal dissension which eventuated 
in the removal of Chairman Arthur E. Morgan by President Roose- 
velt in 1937. It is sufficient therefore to note here that the Morgan 
imbroglio was in substantial part an incident in the eventual solu- 
tion of the problem of administrative organization, a problem which 
was resolved in 1937 by the dual decision, made by the Board of Di- 
rectors, (1) to confine the Board to consideration of broad policy is- 
sues and of problems laid before it by its administrative officers, and 
(2) to name a General Manager to serve as the Board's executive 
officer and to provide a responsible channel for staff communication 
with the Board. In summary, TVA's Board of Directors experimented 
for four years with arrangements short of establishment of a chief 
executive officer; in 1937 the Board became convinced at last of the 
futility of expecting constructive executive action from a multiple- 
member organ and reluctantly created the position of General Man- 
ager. The basic organizational pattern established in that year has 
prevailed since. 

2. A second issue related to the subject of administrative organi- 
zation had to do with the method of functioning of the new agency. 
The issue was epitomized in the views of two of the original Board 
members. Arthur E. Morgan maintained the position that the TVA 
should proceed with plans for implementing its programs with its 
own staff, with only secondary consideration to the wishes and re- 
sources of the governments of the region. A second Board member, 
Harcourt A. Morgan, had had long experience in dealing with state 
and local governments and was convinced that they could make im- 
portant contributions to the TVA programs; he favored operating 
to the extent practicable through local organizations and institu- 
tions, reserving for TVA administration only those aspects of pro- 
grams clearly beyond the resources and competence of existing gov- 

Retrospect and Prospect 261 

ernments. It became evident fairly early that the TVA would not be 
able single-handed to mount and man all of the many program ac- 
tivities entrusted to it, and the tide began to run in favor of wide 
reliance on state and local officials. The decision was not made final, 
however, until the departure of Arthur E. Morgan; thereafter there 
was rapid spread of the network of intergovernmental agreements 
which has resulted in what more than one of the essays of this volume 
have called "co-operative administration." The decision, taken some 
fifteen years ago, to work through the agencies of existing government 
to the extent practicable rather than to build a parallel administrative 
structure was responsible perhaps more than any other one thing for 
determining the administrative character of the TVA and for setting 
the pattern of its relations with existing governments. It emphasized 
the fundamental significance of education and persuasion for TVA's 
workways, and banished the threat which some professed to see of a 
"supergovernment" in the region. 

3. A third major issue of far-reaching consequence concerned the 
method by which TVA's physical structures were to be built. These 
included principally the system of dams for the control of the river, 
transmission lines, and, later, steam-electric generating plants. Money 
was made available almost immediately for the Norris and Wheeler 
Dams, and TVA was charged to go ahead with their construction. 
Normal procedure would have entailed delays of many months for 
the preparation of engineering designs, negotiation with contractors, 
receiving bids and awarding contracts, and so on. But there was a sense 
of urgency in the air: economic activity was at a standstill, there were 
thousands of unemployed workmen in the Valley, and the President 
was anxious for construction to get under way. So were the leaders 
in Congress who had been instrumental in passing the TVA Act, 
and so finally were the people of the region. In the circumstances, 
the TVA Board of Directors made a decision to organize and main- 
tain its own design and construction forces. In the early days the 
Board called upon the Bureau of Reclamation, whose staff had had 
wide experience in dam design. From the beginning, however, the 
TVA operated its own construction force, and soon it had recruited 
a competent engineering design staff as well. This decision made of 
the Tennessee Valley Authority in one respect a vast construction en- 
terprise which at one time employed more than 30,000 workmen 
and which from 1933 to 1953 built or had under construction some 20 
dams and 8 steam plants at a total cost of a billion and one half dollars. 

The decision to employ force account construction was perhaps as 

262 Twenty Years of TVA 

significant as any ever reached by TVA. The force account system 
had been very little used by federal agencies in 1933, hence TVA 
broke new ground in its decision to employ that system. In its twenty 
years of experience with the force account, the TVA greatly simplified 
procedures on major construction projects, particularly in the mat- 
ter of co-ordinating engineering design and construction. It reduced 
the time required for building quite substantially as it repeatedly 
brought its great new projects to completion ahead of schedule. Fur- 
ther, it demonstrated the economy of maintaining a large engineering 
and construction force and keeping it fully employed. In the realm 
of labor-management relations, the TVA was compelled to depart 
from all federal precedent by treating its workmen as a private 
employer must. TVA's Division of Personnel has functions and re- 
sponsibilities which set it apart from the typical governmental per- 
sonnel agency. 

4. A fourth major decision had to do with the problem of TVA's 
relation to its potential power market area. This question did not 
press for an answer in the early years, for there was little surplus 
power to be marketed. As dam followed dam to completion, however, 
the problem became more and more difficult. TVA and the Valley 
municipalities and co-operatives approached a solution by purchasing, 
in 1934 and the years following, facilities from private utilities which 
in time gave them a virtual monopoly of production and distribution 
of electricity throughout most of Tennessee and in parts of six sur- 
rounding states as well. In deciding upon this course, both the TVA 
and the private utility companies acknowledged the monopoly char- 
acter of the electric utility business. Either the private utilities or 
TVA might operate within the Valley, but not both. Recognizing this 
basic fact, the TVA and the municipalities and co-operatives offered 
to buy and the private utilities agreed to sell all privately held fa- 
cilities within ready transmission distance of TVA's production plants. 
Coincidentally, approximate boundaries for the TVA power service 
area began to become stabilized. 

The consequences of this series of decisions were enormous. In 
brief, they converted the TVA from an incidental producer of surplus 
power into a public utility with sole responsibility for providing power 
over an area of 80,000 square miles reaching into seven states. Ac- 
ceptance of the service area concept carried with it the obligation to 
provide all the power requirements of the area, and these assumed 
staggering proportions with the coming of the giant defense plants 
of World War II. The phenomenal growth in the region's power re- 

Retrospect and Prospect 263 

quirements also had the effect of placing the steam-electric plant 
on a new and quite different footing; for whereas such plants were 
employed in the early days largely to firm up hydroelectric power, 
they came eventually to constitute a basic source of power. The hydro- 
electric-steam ratio trend may be seen from the facts that from 1950 
to 1952 the percentage contribution of the steam plants to TVA's total 
generating capacity more than doubled, and that it was expected to 
more than double again by 1956. The emphasis in generation of 
electricity thus necessarily has swung from water power to steam- 
electric power, as the consequence of a series of major decisions which 
began as early as 1934. 

5. In the process of becoming a public utility with sole responsi- 
bility for producing electricity throughout a designated service area, 
the TVA concurrently had to resolve the issue of the method of dis- 
tributing its power. It was charged by the Act of 1933 to give prefer- 
ence to municipalities, co-operatives, and other public agencies in 
marketing its surplus power. In the early years very few municipalities 
were able to take advantage of the opportunity to purchase TVA 
electricity, for few owned their distribution systems. There were few 
co-operatives. There was, at the same time, little surplus power for 
sale. In the circumstances, TVA might well have concluded not only 
to produce power wholesale but to market it at retail as well. It 
chose rather to stay out of the retail marketing business, excepting for 
some 25 large consumers (including the Atomic Energy Commission) 
which use electricity in such large amounts as to warrant direct sale, 
and to encourage the growing interest of municipalities and co- 
operatives in acquiring local distribution systems instead. The result 
is a network of approximately 150 local distribution systems which 
blanket the service area and which purchase their power from the 
TVA. The effects of the policy manifest in this decision were far- 
reaching for the TVA itself, for the local distribution systems, for the 
units of local government, and for intergovernmental relations in the 

6. The nitrate plants at Muscle Shoals had long been prominent 
in public, particularly in Congressional, discussions; and they played 
a leading role in the Act of 1933. The Act gave TVA control of ex- 
isting plants, granted it the power to construct new plants as 
needed, and authorized it to manufacture and sell fertilizer. (The 
other side of the coin was, of course, marked "munitions.") Under 
such a charter the Board of Directors enjoyed very wide latitude. It 
might have developed into a big producer and distributor of fertilizer; 

264 Twenty Years of TVA 

the leaders of the fertilizer industry, indeed, labored for some years 
under the apprehension that that was the Board's intention. The Board 
chose instead to emphasize experimentation rather than production 
and sale, with the result that its production has never totaled more 
than a small percentage of the gross national output of fertilizer. At 
the same time, the TVA entered into agreements with the land-grant 
colleges by which both the agricultural extension services and the ex- 
periment stations joined in fertilizer experiments and in making new 
fertilizer materials available on the land. The system of test-demonstra- 
tion farms, described above in the essay on agriculture, was one result 
of this partnership. Emphasis on total farm management programs was 

7. With respect to land acquisition, the TVA in the early years 
followed a liberal purchase policy. In the Norris reservoir area in 
particular it purchased a large acreage. The reasoning supporting this 
policy was simple and straightforward: the land was cheap, it was not 
productive under private ownership, such of it as was in agricultural 
use might better be retired from cultivation, and it might be placed 
under more advanced land management practices if it were held in 
public ownership. Illustrative of the spirit of these early years was the 
proposal made in 1937 by TVA's chief forester that public forests in 
the Valley be increased to almost fifty per cent of the total forest land, 
the bulk of these holdings to be administered by the U. S. Forest 
Service as national forests but a large acreage to be operated by TVA 
for the demonstration of scientific forest management practices. Simi- 
lar proposals were made with regard to agricultural lands. 

Instead of accepting this recommendation, the Board of Directors 
replaced its chief forester. This change symbolized a shift in think- 
ing about land acquisition on the part of TVA's responsible officials. 
From 1938 forward a much more moderate acquisition policy was 
pursued. The Board thereafter was content with the purchase of a 
protective strip bordering each new reservoir, in addition to land to 
be permanently flooded; and more recently it has been satisfied to 
obtain flowage easements, leaving in private ownership all land ex- 
cept that needed for public access or other program use. Simultane- 
ously the TVA has increased its manifold relationships with state and 
local agencies — with the land-grant colleges and with the state de- 
partments of agriculture and forestry, for example. This has meant, 
among other things, that TVA has elected to pursue its goal of natural 
resources development through existing agencies rather than through 
elaboration of a direct action program of its own. 

8. There were those in the beginning who expected the TVA to as- 

Retrospect and Prospect 265 

sume active leadership in regional planning. The Act of 1933, indeed, 
in Section 22 provided a statutory basis for these expectations: 

. . . the President is hereby authorized ... to make such surveys of and 
general plans for said Tennessee basin and adjoining territory as may be 
useful to the Congress and to the several States in guiding and controlling 
the extent, sequence, and nature of development that may be equitably 
and economically advanced through the expenditure of public funds, or 
through the guidance or control of public authority, all for the general 
purpose of fostering an orderly and proper physical, economic, and social 
development of said areas . . . 

Those who read the passage literally were prepared for vigorous and 
direct action by the Board of Directors as spokesmen for the Presi- 
dent. The Board did proceed initially along lines suggested by the 
directive, establishing a division which emphasized regional planning 
and giving considerable attention to such subjects as land and water 
use planning. After 1937-38, however, gradual modification of the 
early planning orientation set in. The regional planning unit was 
eliminated, some of its functions being dropped entirely, others being 
shifted to other divisions; and the regional planning emphasis which 
the law seemed to contemplate went into limbo. In place of con- 
certed action in regional planning by TVA, there developed the by 
now familiar pattern of agreements with the cognate agencies of 
existing governments — with state departments of conservation and 
forestry, for example, and with state and local planning bodies. Thus 
has primary responsibility for planning passed from the TVA to state 
and local agencies, with the former remaining active chiefly in the 
role of encourager, adviser, and technical consultant. 

The achievements of the Tennessee Valley Authority may legiti- 
mately be judged by either of two standards. First, has the agency 
done what it set about to do? Most analysts find little difficulty in 
concluding that, in the accomplishment of the goals which it fixed 
for itself, the TVA has done well. Second, has the TVA been success- 
ful as measured by the goals set for it in the Act of 1933? The an- 
swer to this question depends, of course, on the appraiser's reading 
of the Act; by a strict construction of its terms, most observers an- 
swer yes; but by a liberal interpretation, some credible witnesses say 
no. The measure not only invited but required extensive interpreta- 
tion. Not once but many times "two roads diverged in a yellow 
wood." The Board chose the left road at one such divergence, the 
right at another, the right at yet a third. In nearly every instance 
both roads were inviting, and almost always the choice was a hard 

266 Twenty Years of TVA 

one. Who can say that, considering the alternatives available, a par- 
ticular decision was the wrong decision? It might be supposed that, 
in a given decision situation, the directors themselves would be most 
fully conversant with the forces at play, though even as to that critics 
will differ. 

Some Choices Yet To Be Made 

As 1953 matures into summer the Tennessee Valley 
Authority faces a number of problems, some new, some rooted in its 
twenty-year past. The big dams are built and the river is tamed, as the 
Act directed it should be. No longer is there a national emergency to 
sustain the TVA in the face of latent opposition, no longer are its 
friends united and its enemies confused before overriding considera- 
tions of democratic survival. A new national administration has called 
for a "long, hard look" at the TVA. Additional forks, many of them, 
appear in the road. What are the major issues, and what are the 
choices to be made? 

1. The chief problem confronting the TVA is the persistent and 
pervasive issue of program definition. It would not be correct to con- 
sider this a new or emerging problem, for the whole history of TVA 
has been one of constant definition and redefinition of program. 
Nevertheless it is incumbent upon the Board of Directors, at the end 
of twenty years, to take special note of the scope, depth, and balance 
of the program. Is it broad enough to serve the purposes for which 
the TVA was created? Does it cover the needs of the region, in terms 
appropriate to a regional authority? Do its various parts hang together 
logically or is it, as is sometimes charged, a patchwork program? Four 
special program problems have been singled out for mention here. 

The first concerns the place of power production and sale in TVA's 
total program. There is no question but that the generation and dis- 
tribution of power were prominent in the minds of those who spon- 
sored TVA, for the Act of 1933 is explicit in its grants of authority 
to the new agency with respect to power. Nevertheless, the production 
and sale of power appear to have been regarded as secondary to the 
principal purposes of navigation and flood control. The title of the 
Act makes no reference to power, while its provisions which relate to 
that subject refer repeatedly to the sale of surplus power, that is, 
". . . power not used in . . . [TVA's] operations. . . ." TVA itself 
regards its power program as secondary, as the author of the essay 
on power (above) testifies: he calls power production auxiliary, even 
incidental, to the major program purposes. Yet the production and 

Retrospect and Prospect 267 

sale of power have come to dominate program action if not program 
thinking in TVA. Here is where TVA takes its stand, here is where 
the battle lines are drawn in Congress, here is where attacks on the 
agency center. The process by which TVA evolved as a great electric 
power utility was a gradual one, with no one step calculated to pro- 
duce the end result achieved. That result is an over-all program in 
which a secondary activity, the production and sale of surplus power, 
has come to overshadow other program goals, some say to the con- 
siderable disadvantage of the whole. 

Note has been taken elsewhere of the emphasis placed on the 
general development of natural resources by the TVA Act. The Su- 
preme Court itself (in United States ex rel. Tennessee Valley Authority 
v. Welch, 327 U. S. 546, 1946) has quoted approvingly Section 22 of 
the Act, which dwells at some length on the subject of the physical, 
economic, and social development of the region. It is not inappro- 
priate, therefore, to raise as a second significant program problem the 
place of resource development in TVA's program. In an important 
sense, of course, the agency's whole program, including power pro- 
duction and sale, is concerned with resource development. Techni- 
cally, however, the term is employed to refer to such activities as 
agricultural research and demonstration; promotion of increased pro- 
duction, protection, and utilization of forest resources; the integrated 
development of land, water, and other resources in tributary water- 
sheds; facilitation of the public use of TVA reservoirs; topographic 
mapping; and analysis of regional government and business activities. 
In this sense, resource development has never commanded any con- 
siderable proportion of TVA's total appropriation. The top figure 
spent for these activities, approximately $7.5 million in 1947, has 
dwindled year by year until for fiscal year 1953 it stands at a little 
more than $3.25 million. The latter sum represents less than two 
per cent of the total budgeted expenditures, but the functions which 
it finances are basic to the whole TVA idea. Without these resource 
development operations the TVA would be almost entirely an en- 
gineering and public utility enterprise; with them, it is an agency for 
leadership in pursuit of ". . . the proper use, conservation, and de- 
velopment of the natural resources . . ." of the Valley, in accord- 
ance with the Act of 1933. It is little wonder that many friends of 
TVA refer to such resource development work as "the central idea" 
behind the agency, or that some enemies concentrate their attack on 
this relatively small appropriation item. The character of the TVA 
will be quite substantially modified if these resource development 
activities are further diminished or eliminated. 

268 Twenty Years of TV A 

The third special problem concerns TYA's fertilizer program. The 

fertilizer-munitions properties at Muscle Shoals, which were basic in 
the thinking of the early leaders in the TV A movement, were conveyed 
to TV A by the Act of 1933 with some quite explicit authorizations 
for future construction and use. The fertilizer program thus became 
a basic element in the total regional program, and it has remained so 
throughout the twenty years. Some critics insist nevertheless that in- 
clusion of the fertilizer-munitions program was fortuitous, that it is 
related only indirectly to a regional program properly conceived, that 
it is defined in national rather than regional terms, and that the 
TYA should divest itself of its fertilizer plants and disclaim further 
responsibility in that field. It is hardly necessary to say that TYA's 
Directors do not share this view. Their conviction that the fertilizer 
program is sound, however, does not relieve them of the necessity of 
frequently re-examining its relation to the total regional program. 

The fourth program problem relates to upstream control of water. 
TYA's philosophy embraces as component parts of the same process 
both big dam control of the rivers downstream and control at the 
source of the water through sound farm and forest practice. Progress 
to date has been considerably greater in containment of the major 
streams than in control of the headwaters. TYA has recently turned 
its attention to the problem of small watersheds, and there is every 
indication that increasing emphasis will be placed on more effective 
control of the water close to its source. There is evidence also of an 
incipient national interest in the problem of small watersheds. 

2. Laving aside the continuing issue of program redefinition, a 
second major problem involves the method of financing the con- 
stantly expanding power needs of the region. At the end of 1952 a 
responsible TYA spokesman estimated that, excluding atomic energy 
requirements, normal growth in the Valley's power needs would be 
750.000 kilowatts per year for the next five years. This is more than 
seven times the amount of power generated by X orris Dam. Since there 
are no more favorable sites for large hydroelectric installations, the new 
power must be obtained from steam-electric plants. The estimate of 
future power needs therefore calls for the beginning of construction 
on one big new steam plant a year for five years. Capacity to meet the 
normal load .growth is estimated to cost more than Si 00 million a 
year, or well over half a billion dollars for the period. TYA maintains 
that it cannot avoid responsibility for supplying this need. Its projec- 
tion of expanding requirements may be challenged, but not its duty 
to meet the demand: for TYA is the sole supplier of electricity in 
the Tennessee Valley. 

Retrospect and Prospect 269 

During its first twenty years the TVA relied mainly upon Con- 
gressional appropriations to meet its capital construction costs. Such 
appropriations have come more and more grudgingly with the passing 
of time. It may be that the day of construction under Congressional 
appropriations is done, at least for an indefinite period. Two other 
methods of financing, which have already been employed to some 
extent, appear to be feasible. First, TVA may use its own (corporate) 
funds, that is, its power earnings, for capital construction, as it has 
done for transmission line and sub-station construction, and for some 
generating units. Second, it may issue revenue bonds to cover capital 
costs. A combination of the two methods, or indeed of all three, could 
of course be worked out. The use of corporate funds for new projects 
or of revenue bonds for any capital construction requires specific 
authorization by Congress. Here is a problem of the first magnitude 
which requires immediate attention. Upon its solution will depend, 
to a considerable extent, the future course of the Tennessee Valley 

3. A closely related problem concerns the further industrialization 
of the Tennessee Valley. As more than one of these essays have noted, 
the region has made great strides along the way from a rural-agricul- 
tural to an urban-industrial economy during these twenty years; yet 
a long, hard road lies ahead. There are resources to be utilized, 
labor to be employed, and markets to be served by regional industries 
yet to be born. As illustrations, the forest products industries of the 
Valley remain sorely underdeveloped, while in this most active of all 
American markets for such products there is not a single major 
electrical appliance industry. The Tennessee Valley Authority, as a 
regional development agency, cannot but be vitally concerned over the 
fact that, notwithstanding its relatively rapid progress toward indus- 
trialization in the last two decades, the region continues to lag be- 
hind the rest of the country in industrial development and per capita 

4. Contemplation of the need for further industrialization leads 
to speculation concerning possible extension of the newly publicized 
(but long existent) "partnership principle." Clearly further indus- 
trial development of the region along sound lines will require the 
co-operation of all partners, public and private alike. Just as clearly 
there has long obtained a lively spirit of partnership between TVA 
and business. TVA and the Aluminum Company of America years 
ago worked out a mutually satisfactory arrangement for the integra- 
tion of several Alcoa dams into the TVA system. TVA played an 
important part in bringing the new Bowaters newsprint plant to East 

270 Twenty Years of TVA 

Tennessee, and its services have been publicly recognized by Bo- 
waters spokesmen. TVA made a signal contribution to the spectacular 
new chemical plant developments at Calvert City, Kentucky. As to the 
relations between the TVA and neighboring private power com- 
panies, the chairman of the Board of Directors of the Alabama 
Power Company recently had this to say: 

Since 1939 our relations with TVA have been satisfactory; power has been 
sold or exchanged between TVA and The Southern Company group, of 
which Alabama Power Company is a member, and each has helped the 
other in emergencies that inevitably arise in large system operation. 

The relationship has now for more than a decade been a pleasant one, 
and illustrates that government and industry can sometimes work in har- 
mony for the public benefit and to the mutual benefit of each. 2 

Notwithstanding the many constructive relationships long sub- 
sisting between TVA and private business, there is a persistent 
rumor that vast new developments in the "partnership principle" 
are in the offing. TVA will need to examine each new proposal for 
an extension of partnership as it comes up. It will wish to ask a 
number of questions. How widely applicable is the partnership prin- 
ciple in practice? How far can an agency of government go, and spe- 
cifically how far can TVA go, in the name of partnership with busi- 
ness without surrendering (or seriously damaging) its legal responsi- 
bility? Through whose initiative is an extension of partnership to be 
sought? If TVA assumes leadership, is the partnership principle 
therefore damaged or destroyed? What are the means by which part- 
nership is to be extended, and what are the criteria of the success 
of partnership arrangements? What are the values of partnership? Is 
the principle of partnership inherently good, or are partnership agree- 
ments good only as they serve useful purposes? Are the ends to be 
served primarily private or primarily public? Of what value is the 
partnership principle in reconciling these sometimes conflicting ends? 
It may be expected that the TVA will continue to support all co- 
operative arrangements which it deems proper and which promise 
to be effective, as it has for twenty years. At the same time, it may be 
doubted whether it will purchase without careful examination of the 
contents every package offered under the label "Partnership Princi- 

5. A series of problems of a quite different character arise from 
the maturation of the TVA as an administrative agency. The TVA 

2 Thomas W. Martin, The Story of Electricity in Alabama (Birmingham, 1952), 
p. 110. 

Retrospect and Prospect 271 

is not venerable as government agencies go, but it is approaching its 
majority; and in any event its history of two decades warrants specula- 
tion concerning both the administrative lessons of the past and the 
prospects for the future. For instance, there has been remarkably little 
turnover in the TVA Board of Directors, while many of the agency's 
chief administrators have been in its employ from the beginning. This 
circumstance unquestionably made for stability in a young and ex- 
perimental agency; but it may have an effect less than wholly de- 
sirable on the program and the workways of a maturing enterprise. 
A distinguishing feature of the TVA in its early days was its buoyancy, 
its dedication, its zealous pursuit of its goal, its inventiveness and 
imaginativeness and daring. Is its spirit as adventuresome now as it 
was in the late thirties? Does an administrative agency, like an in- 
dividual, in its time play many parts, from infancy to manhood to 
"second childishness and mere oblivion"? For instance again, is the 
public corporation equally effective as a device for launching an en- 
terprise and for carrying forward its affairs once it is firmly on its 
feet? Is it equally useful for a youthful agency and for a mature one, 
for developmental and for operating activities? Is it more at home 
in one kind of atmosphere than in another? What lessons does our 
experience with the public corporation afford for consideration by 
foreign countries? To ask these and like questions is not to propose 
answers, but only to suggest that the time may be here when answers 
might profitably be sought. 

6. A final problem, and one not likely to be solved definitively 
either now or later, turns on the place of the Tennessee Valley Au- 
thority in our governmental system. Earlier essays have treated of 
various aspects of this problem — of the TVA as a federal agency with 
a regional situs, of the relations between TVA and the governments 
of the Valley, of the concept of a geographical region as an administra- 
tive area. Two aspects of the problem are worthy of emphasis here. 
The first concerns the Tennessee Valley Authority in its role as 
synthesizer. One of the most persistent problems of modern times is 
that of marshaling the congeries of special interests in a given area 
in the pursuit of a common purpose. TVA's role has been peculiarly 
that of harmonizer of potentially conflicting interests in pursuit of the 
goals of control of the river, economic development of the Valley, 
sound utilization of natural resources. It is perhaps in the last area 
that TVA has made its most notable contributions. The TVA is in 
an important sense a regional department of natural resources. Its 
success in persuading the governments of the region to co-operate in 
a frontal attack on the problems of resources administration has 

272 Twenty Years of TVA 

been noteworthy. Its achievement in reconciling the potentially con- 
flicting interests of its own specialists—engineers, chemists, foresters, 
agronomists, power men, doctors — in the concerted pursuit of over-all 
program goals likewise has been substantial. 

A second point marked for special emphasis concerns the leader- 
ship role of the TVA. Some have been critical of the TVA for its 
initiative in identifying and attacking the problems of the region. 
Passing by the Act of 1933, which explicitly lodged leadership re- 
sponsibility with the TVA, the question may be raised whether the 
assumption of leadership by a federal agency is bad per se. If it is 
not judged to be inherently bad, then the question of its justification 
would seem to hinge on available alternatives. What unit or what 
agency of government is qualified to address the problems of an 
area more than state but less than nation in extent? The governors of 
the region paid little heed to its problems prior to TVA, although 
they have supported that agency almost uniformly since 1933. The 
same may be said for the congressmen from the Valley states. Various 
federal agencies — the Forest Service, the Soil Conservation Service, 
and the Corps of Engineers among them — have long had specialty in- 
terests in the Valley, but their concerns have not been defined in 
regional terms nor have they been effectively co-ordinated with those 
of other governmental agencies operating there. The Tennessee Val- 
ley Authority emerges, then, as the only public agency of Valley-wide 
jurisdiction with a general responsibility for the natural resources of 
the region. It does not fit into the standard pattern of thought about 
our federal system, for one reason because it was pragmatic rather 
than doctrinaire in its inception. It was also frankly experimental. 
Its purpose was not to extend the principles of federalism by deduc- 
tive logic, but to make the federal system work in an area and at a 
level where it had been ineffectual before. How well it has succeeded 
is a question which may be expected to be debated for a long time 
to come. 

The Tennessee Valley Authority has been the object of abiding 
attention since its establishment in 1933. It has been probed at hear- 
ings before Congress and its committees literally scores of times, and 
has been subjected to one full-scale Congressional investigation. It has 
been attacked frequently by enemies in both private and public 
places. It has been steadfastly defended by its directors and admin- 
istrators, who have proved to be generally highly articulate men of 
intense conviction. It has been analyzed by scholars. It has been ac- 
corded attention, both reportorial and editorial, in the press like 
that seldom given a public organization. Few agencies of government 

Retrospect and Prospect 273 

have been so widely discussed and debated in public print. The 
literature of the TVA is voluminous, its formal bibliography of 
books, reports, and articles quite substantial. 

Robert Morris, in commenting on the Constitution of the United 
States to a friend in the days just before adoption, wrote: "This paper 
has been the subject of infinite investigation, disputation, and decla- 
mation. While some have boasted it as a work from heaven, others 
have given it a less righteous origin. I have many reasons to believe 
that it is the work of plain honest men, and such, I think, it will 
appear." A fair appraisal of the TVA supports the conclusion that 
that agency in some measure may have earned the right to the bene- 
diction pronounced over the Constitution by Robert Morris at the 
time of launching of the Republic. 


accounting, TVA, 62, 63, 71 
"activity account" concept, 69-70 
Central Accounting, 71 
Chemical Accounting, 71 
criticism of, 67 
Plant Accounting, 71 
Power Accounting, 71 
TVA system, 66-70 
Ackerman, Edward A., 244 
tools of, 50 

TVA contribution to, 248-251 
Aetna Coal Company case, 30 

v. Tennessee Valley Authority, 30 fn. 

African TVA, 252 
Agricultural Adjustment Administra- 
tion, 166 
Agricultural Economic Branch, TVA, 

Agricultural Extension Service, 166 
Agricultural Relations, Division of, 
TVA, 40 
function of, 38 
Agriculture, Department of, United 
States, 66, 106, 153, 154, 159, 160, 
161, 168, 173, 174, 175 
Secretary of, 22, 23 
agriculture, 62, 96 
program, TVA, 152, 171-176 
resources, 170 
See also: Tennessee Valley 
Air Force, United States, 120 
Alabama, 1, 3, 16, 17, 30, 54, 80, 112, 
141, 172, 191, 203, 210, 212, 214, 217, 
223, 227, 234, 236, 238 
University of, 
Press, 236 
Alabama Power Company, 20, 23, 24, 30 

Chairman, Board of Directors, 270 
Alabama State Health Department, 196, 

Alabama State Health Officer, 196, 197 
Alabama State Planning Commission, 

Alcoa, Tennessee, 78, 86, 227, 269 

Allbaugh, Leland G., 152 

Aluminum Company of America, 78, 84, 

85, 86, 125, 269 
American Federation of Labor, 58, 59 
American Revolution, the, 144, 149 
American Waterways Operators, Inc., 

104 fn. 
Anderson County, Tennessee, 144 
Andrews, T. Coleman, 68 
Anglo-Egyptian Sudan, 252 
Antioch College, 258 
Appalachia Darn, 86 
Apex Smelting Company, 157 
Appalachian Power Company case, 33 
Appropriation Act of 1948, 26, 111, 136 
Architectural Design Branch, TVA, 91 
Arizona, 29 

Arizona v. California, 29 
Arkansas-Red-White Basins, 245 
Army Chemical Corps, United States, 


Army Map Service, United States, 83 

Army, United States, 157, 158, 160, 161 

Articles of Agreement between the 

Tennessee Valley Authority and the 

Salary Policy Employees Panel, The, 

Artman, J. O., 177 
Ashwander case, 30, 32 

v. Tennessee Valley Authority, 30 fn. 
Associated Co-operatives, Inc., 167 
Atlanta, Georgia, 58 
Atomic Energy Commission, 6, 87, 120, 

121, 134, 157, 263 
Auditing Branch, TVA, 71 
Australia, 252 

Baker, Newton D., 22 

Baker bill, 22 
Barge Grain case, 105-106 
Bells, Tennessee, 119 
Big Ridge, Tennessee, 210 
Birmingham, Alabama, 58 

United States District Court, 31 




Blue Ridge Dam, 85 

Boone Dam, 87, 146, 149 

Boone reservoir, 138 

Booneville Power Administration, 247 

Bovvaters Southern Paper Corporation, 

100, 101, 269 
Bristol, Tennessee, 146 
Britain, 166 

British colonial administration, 255 
Budget, Bureau of, United States, 48, 

64, 66, 67, 71, 160 
Budget Officer, Chief, TVA, 48 
Budget Staff, TVA, 36, 47, 51, 71, 76 
budget system, TVA, 62, 63, 64-66, 71 
Butler case, 29 

United States v., 29 fn. 
Butler, Tennessee, 148, 149 

Cairo, Illinois, 94 
Caldervvood Dam, 78 
Calhoun, Tennessee, 100, 101 

Central Valley of, 245 
Calvert City, Kentucky, 100, 231, 270 
Canada. 192 

Carderview, Tennessee, 149 
Carolina Power and Light Company, 78 
Carter County, Tennessee, 144 
Case, Harry L., 50 
Central Farmers Fertilizer Company, 

centralization v. decentralization, 11-12 
Chattanooga, Tennessee, 71, 74, 78, 91, 

93, 97, 100, 120, 191, 207 
Chatuge Dam, 86 
Chatuge reservoir, 147 
Chemical Engineering, Office of, TVA, 

40, 163 
activities of, 38 
Cheoah Dam, 78 
Cherokee Dam, 84, 85 
Chicago, Illinois, 107 
Chickamauga Dam, 85, 101 
Chickamauga reservoir, 191 
Civil Design Branch, TVA, go 
Civilian Conservation Corps, 179, 183, 

184, 207, 209 
Civil Service Act of 1883, 53 
civil service, 59 
reform movement, 53 
system, 27 
Clapp, Gordon R., 1, 44, 169 
Clarke-McNary Act, 183 
Clark, John H., 62 
Clinton Forest Nursery Operation, TVA, 


Clinch River, 84 

Coast Guard, United States, 103 


Cauca Valley Authority, 253 
government of, 253 
Colorado, 163 

Colorado River, 29, 80, 245, 246 
Columbia Basin Inter-Agency Commit- 
tee, 245 
Columbia River, 12, 80 

system, 245 
Columbia, Tennessee, 155 
communism, 254 
Communist Party, 53 
Comptroller General, United States, 28 
Comptroller, TVA, 42, 66, 71 
Congress, United States, 3, 4, 16, 17, 19, 
20, 21, 24, 26, 27, 28, 31, 34, 35, 36, 
47, 48, 54, 57, 64, 66, 67, 71, 82, 85, 
86, 87, 97, 103, 105, 109, 110, 111, 
112, 113, 116, 121, 122, 127, 128, 130, 
i33» x 35» !3 6 > 150. !54» 160, 174, 202, 
211, 233, 237, 238, 239, 245, 249, 250, 
257, 258, 259, 261, 267, 268, 272 
Conservation Engineer, Chief, TVA, 42 
Constitution of United States, 

Article I, section 8, 31 
Construction and Maintenance Branch, 

TVA, 91 
Construction, Division of, TVA, 90, 91 
Construction Plant Branch, TVA, 91 
construction program, TVA, 82-90, 261, 

Consultants, Board of, TVA, 91 
Coolidge, President Calvin, 24 
Co-ordination, Division of, TVA, 40 
co-operative conference plan, TVA, 59 

See also: union-management 
Coosa River, 80 

Corps of Engineers, United States Army, 
3, 81, 82, 83, 84, 90, 103, 196, 245, 
county agents, 144, 145, 146, 183 

and TVA, 29-34 
Cove Creek Dam, 24, 195 
Cumberland Basin, 90 

Dayton, Ohio, 79 
Decatur, Alabama, 97, 100 
Denison Dam, 34 
Denver, Colorado, 85 
Derryberry, Dr. O. M., 193 
Design, Division of, TVA, 73, 90 
Directors, Board of, TVA, 27, 35, 36, 40, 
41, 42, 45, 46, 48, 49, 51, 54, 58, 59, 



Directors (continued) 

64, 71, 73, 109, 110, 118, 138, 141, 
161, 169, 178, 179, 196, 201, 234, 
249, 259, 266, 268, 271 
Chairman of, 39, 40, 41, 48, 80, 197, 

first years, 39-40, 260-261 
function of, 47-48 
power of, 136 
Douglas Dam, 84, 86 
Drafting Service Branch, TVA, 91 
Durisch, Lawrence L., 232, 259 fn. 

East Tennessee, 101, 142, 144, 270 

coal deposits, 1 
East Tennessee Light and Power Com- 
pany, 112 
Education, Office of, 150 
Eisenhower, President Dwight D., 256 

State of the Union Message, 232 
Electrical Design Branch, TVA, 90 
electric power program, TVA, 28, 91, 
108-136, 193 
contract, 113-114, 134 
disposition of revenues, 114-116 
distribution system, 13, 110, 112-113 
distributors of, 1, 118, 119, 120, 122, 

125, 126, 131-132, 133 
electric power, 2, 23, 24, 50, 80, 81, 
86, 87, 91, 94, 247, 262, 263, 266, 
267, 268 
financial aspects of, 128-136 
retail rates, 118-119 
sales to federal agencies, 120-121 
sales to industry, 121-123 
supply of, 127-128 
transmission system, 124 
utilization of, 120, 124-127 
wholesale rates, 116-117 
Employee Relationship Policy, TVA, 

Employees' Compensation, Bureau of, 

employees, TVA, 28 

appeals procedure, 55, 56 

building and maintenance, 59 

clerical workers, 59 

salary policy, 59 

Salary Policy Employee Panel, 59, 60 

trades and labor, 58-59, 60 

white collar, 59, 60 
Engineer, Chief, TVA, 42, 90, 108 
Engineer, Chief Construction, TVA, 90 
Engineer, Chief Design, TVA, 90 
Engineer, Chief Planning, TVA, 90 

Engineering, Office of, TVA, 90, 91, 108 

activities of, 38 
engineering, TVA, 

organization, 90-91 
Ericson, E. P., 95 
Executive Branch, United States, 27 

Fannin County, Georgia, 144 
Farmers' Federated Fertilizer Corpora- 
tion, 22 
Federal Chemical Corporation, 23 
Federal Employees' Compensation Law, 

federal government, 4, 12, 16, 17, 18, 

20, 30, 133, 134, 178, 219, 232, 233, 

245» 250 
Federal Power Commission, 33, 71, 115, 

128, 129, 133, 196 
Federal Water Pollution Control Act of 

1948, 201, 202 
Federal Water Power Act, 33 
fertilizer, 18, 20, 21, 22, 24, 120, 152, 

1 57» *74» 1 7 6 » 248, 263, 264, 268 
need for, 153-155 
distribution and use, 160, 162, 172- 


agronomic research, 162-164 

farm test-demonstrations, 160, 164- 

166, 173 
wide-scale distribution, 166-169 
program, TVA, 7, 28, 62 
processes, 158 

financing, 160-162 
need for, 153-155 
program, 155-157 
Finance, Division of, TVA, 38, 47, 51, 

financial administration, TVA, 
control, 62-64, 66, 68, 70 
organization of, 70-72 
reporting, 67-68 
Fish and Game Branch, TVA, 189 
Fish and Wildlife Service, United States, 

9, 190, 191 
fisheries program, TVA, 190 
flood control, 23, 25, 30, 50, 69, 79, 80, 
102, 108, 128, 132, 133 
program, TVA, 8, 13, 81, 84, 92-93, 

94. 191. 193 
flood control act, first, 16 
Flood Control Branch, TVA, 90 
Florence State Teachers College, Ala- 
bama, 216 
Florida, 156, 157, 206, 209, 216 
Fontana, 86, 149 



Fontana Dam, 84 

Fontana Lake, 142 

Ford, Henry, 19, 20, 21, 22 

Foreign Assistance Act, 254 

Forest Development Branch, TVA, 69, 70 

Forester, Chief, TVA, 178, 179, 264 

Forest Farmers Association, 185 

Forest Products Laboratory, United 

States, 186 
Forestry and Soil Erosion, Division of, 

TVA, 40 
Forestry, Division of, North Carolina, 

Forestry, Division of, Tennessee, 185 
forestry program, TVA, 7, 62, 69 

forecast, 188-189 

management, 184-186 

policy, 178-180 

protection, 181-182 

reforestation, 183-184 

utilization, 186-188 
Forestry Relations, Division of, TVA, 
178, 179, 189 

duties of, 179-180 

function of, 38 
Forest Service, United States, 9, 141, 142, 

178, 179, 185, 272 
Fort Loudoun Dam, 85 
Fort Loudoun reservoir, 138, 148 
Fort Patrick Henry Dam, 87, 149 
Franklin, Tennessee, 119 
French Broad River, 84, 86 
Frothingham case, 29, 30 

v. Mellon, 29 fn. 

Gant, George F., 43 

General Accounting Office, United 
States, 28, 67 
Corporation Audits, Division of, 68 

General Agreement between the Ten- 
nessee Valley Trades and Labor 
Council and the TVA, 58 

General Council, 36, 42, 48 

See also: Secretary to the Corporation 

General Engineering and Geology, Di- 
vision of, TVA, 40 

General Manager, Assistant, TVA, 47, 48 

General Manager, Office of, TVA, 36, 
42, 46, 70, 71 

General Manager, TVA, 36, 44, 45, 48, 
5 1 . 55- 73- 249' 260 
chief administrative officer, 42 
duties of, 46-47 

general services, TVA, 72-76 

Geological Survey, United States, 82, 83, 

Geologic Branch, TVA, 90 
Georgia, 1, 112, 199, 214, 234 
University of, 

Press, 236 
Georgia School of Technology, 186 
Germany, 18, 254 
Gibbons v. Ogden, 16 
Graham County, North Carolina, 144 
Grand Coulee Dam, 80, 207 
Great Falls Dam, 85 
"Great Lakes of the South, the," 15, 96, 

Great Smoky Mountains National Park, 

142, 206 
Greece, 205 

Greene, Lee S., iii, 237 fn. 
Grubb, Judge, 32 
Gulick, Luther, 186 
Guntersville, Alabama, 97, 98, 100, 235, 

Guntersville Dam, 85, 235 
Gunther, John, 61 

Hales Bar, 78 

Hales Bar Dam, 81, 85 

Hamilton, Ohio, 79 

Health and Safety, Division of, TVA, 

193' *94> 199 

function of, 38-39 
Health, Director of, TVA, 193 
health program, TVA, 193-205 

co-operation with other agencies, 203- 

malaria control, 195-198 

stream pollution control, 199-203 
Hill, Senator Lister, 24, 54 
Hiwassee Dam, 84, 85 
Hivvassee Island, 191 
Hiwassee River, 84, 101 
Holston River, 84, 86 

South Fork, 84 

Upper, 138 
House of Representatives, United States, 

24, 66, 169 
Hoover Commission, 63 
Hoover Dam, 29, 80 
Hoover, President Herbert, 24 
Howes, Robert M., 206 
Hudson River, 16 
Hydraulic Data Branch, TVA, 90 

Ickes, Secretary Harold, 258 

Idaho, 155, 156 

Industrial Economic Branch, TVA, 171 

Industry, Division of, TVA, 40 

Information Director of TVA, 48 



Information Office, TV A, 251 
Information Staff, TVA, 36, 47, 51 
Inspection and Testing Branch, TVA, 

integration v. separatism, 13 

Interior, Department of, United States, 

161, 245, 246, 258 
Internal Revenue, Commissioner of, 68 
Interstate Commerce Commission, 66, 

98, 105, 106, 107 
Investigation and Research, Board of, 

United States, 103 
Iowa, 163 
irrigation, 80 

Johnson City, Tennessee, 146 
Johnson County, Tennessee, 148 
Johnsonville Steam Plant, 87, 128, 149 
Joint Classification Committee, 60 

Kentucky, 1, 2, 112, 171, 204, 207, 212, 

213, 214, 234, 236 
Kentucky Co-operative, 167 
Kentucky Dam, 81, 85 
Kentucky Lake, 213 
Kentucky reservoir, 94, 138, 141, 191 
Kingsport, Tennessee, 146 
Kingston Steam Plant, 149 
Knoxville, Tennessee, 25, 71, 74, 79, 81, 

83, 84, 85, 91, 94, 96, 97, 100, 106, 

191, 207, 208, 222, 251 
Knoxville News-Sentinel, The, 242 
Knoxville Switching case, 106 
Krutilla, John V., 219 

Lake Mead, 207 
Lake States, the, 206 
Lake Texahoma, 207 
Lake Wilson, 198 
Land Branch, TVA, 72, 142, 143 
land management, TVA, 137-151, 193, 
purchase, 137-140 
review of, 140-142 
surplus land sale, 143-144 
uses of, 142-143 
Land Planning and Housing, Division 

of, TVA, 40 
Law, Division of, TVA, 38, 47, 51, 76 
Le Prince, J. A., 195, 196 
Lilienthal, David E., 40 
Little Tennessee River, 78, 84, 86 
local government, 11, 96, 97, 133, 134, 
142, 175, 176, 203, 209, 212 
and TVA, 9, i47~i49» 223, 232-243, 
250, 260, 265 

Louisville, Kentucky, 58 
Louisville, Tennessee, 148 
Lowry, Robert E., 259 fn. 

McKellar, Senator Kenneth, 54 
malaria control, TVA, 93, 191, 195-198, 
203, 204, 246, 249 

See also: health program 
Management Services Council, 44 
Management Service Staff, TVA, 51 
Maps and Survey Branch, TVA, 90 
Marshall Plan, 254 
Martin, Roscoe C, 257 
Martin, Thomas W., 270 fn. 
Materials Branch, TVA, 72, 73 
Materials Policy Commission, Presi- 
dent's, 247 
Mechanical Design Branch, TVA, 91 
Memphis Power and Light Company, 

Memphis, Tennessee, 58, 195 
merit system, 

and the TVA, 52-55 
Miami River, 79 
Miami Valley, 80 
Michigan, 207, 216 
Middle Tennessee, 

phosphate rock deposits in, 1 
Midwest, the, 159, 167 
Military Affairs, House Committee on, 

Mines, Bureau of, United States, 74 
Minnesota, 207 

Mississippi, 1, 2, 112, 172, 214, 223, 234 
Mississippi River, 4, 16, 80, 91, 94, 97, 
98, 100, 106, 191, 206, 240 

drainage basin, 25 
Mississippi, University of, 

Bureau of Public Administration, 
Missouri, 166 

Missouri Basin Survey Commission, 245 
Missouri River, 12 

Basin of, 245, 247 
Morgan, Arthur E., 3g, 40, 41, 79, 80, 

200, 258, 260, 261 
Morgan, Harcourt A., 40, 260 
Monongahela River, 133 
Montana, 155 
Morris, Robert, 273 
munitions, 152, 153, 158, 159, 167 

See also: fertilizer 
Murray River, Australia, 252 
Murrumbidgee River, Australia, 252 
Muscle Shoals, Alabama, 3, 4, 16, 17, 
18, 20, 22, 23, 24, 30, 40, 71, 74, 77, 



Muscle Shoals (continued) 

84, 121, 152, 154, i57» 227, 259, 263, 

offers to buy from the government, 

fertilizer manufacturing plant at, 57, 

Muscle Shoals Corporation of the 

United States, 24 
Muscle Shoals Dam Lake, 195, 196 
Muscle Shoals Power Corporation, 17 

Nash, Claude W., 137 

Nashville, Tennessee, 58 

National Defense Act of 1916, 3, 18, 154 

National Fertilizer Association, 167 

National Park Service, United States, 

141, 142, 207, 208, 209 
National Resources Committee, 209 
navigation, TVA, 6, 7, 23, 25, 30, 50, 69, 

79, 80, 81, 82, 91, 94, 96, 99, 102, 

103, 108, 128, 132, 133 
Nevada, 29 
New England, 1, 5, 13, 123, 206 

river basins of, 245 
New York, 16, 121, 163, 216 
New York Times, The, 209 fn. 
Norris, 149, 210 
Norris Dam, 24, 84, 85, 88, 93, 111, 195, 

261, 268 
Norris reservoir, 138, 141, 149, 264 
Norris, Senator George, 23, 24, 54 

first bill, 23 
North Carolina, 1, 83, 112, 144, 149, 182, 

201, 212, 214, 234 
western, 2, 142, 172 
North Carolina Planning Commission, 

Northwest, the, 245, 247 
Nottely Dam, 86 
Nottely River, 84 

Oak Ridge, Tennessee, 86, 88, 121, 222, 

226, 227 
Ocoee Dam, No. 1, 85 

No. 2, 85 

No. 3, 86 
Ocoee River, 84 
Office Employees International Union, 

Office Service Branch, TVA, 72 
function of, 74-75 
Office Methods Staff, 75 
Ohio, 79, 121, 133 

Ohio River, 80, 91, 94, 98, 99, 106, 133, 

Ohio River Basin Pollution Survey, 201 
Oklahoma v. Atkinson Co., 34 
Oliver, John, 35 
organization, TVA, 36-42 

Pacific Northwest, the, 222 

Paducah, Kentucky, 79, 88, 121, 231 

Panama Canal, 100 

Park, Parkway and Recreation Area 

Study Act of 1936, 208 
payments in lieu of taxes, TVA, 114, 

»5» !33> i34> 238-239 
Pendleton Act, 53 
Pennsylvania, 121, 133 
personnel administration, TVA, 7, 27 

decentralization of, 55-56 

employee participation in, 56-61 

laws affecting, 52-53 

job classification, 60 

See also: employees, TVA 
Personnel, Director of, TVA, 44, 46, 55 
Personnel, Division of, TVA, 38, 47, 51, 

55» 57> 7 6 > i93» 262 
Pickwick Dam, 69, 81, 85, 88, 99, 210 
planning, 10-11 
Planning Engineer, TVA, 252 
Polk County, Tennessee, 144 
Powell River, 84 

See: electric power 
Power, Division of, TVA, 40 
Power Economist, Chief, TVA, 42 
Power, Office of, TVA, 108 

activities of, 38 
Power Studies Branch, TVA, 90 
President, United States, 18, 26, 27, 35, 
36, 41, 53, 64, 66, 67, 85, 105, 154, 
258, 259, 260, 261, 265 

Executive Office of, 36, 47, 66 
Priorities and Analysis Section, TVA, 72 

function of, 72-73 
procurement, 72-74 
Procurement Section, TVA, 72 

function of, 73 

Sales and Transfer Unit, 74 
Production and Marketing Administra- 
tion, 174 
Project Planning Branch, TVA, 90 
Property and Supply, Division of, TVA, 

38, 47, 51, 72, 76, 137 
Public Health Service, United States, 

1 95» 196, 199, 201, 202, 204 
Public Safety Service, TVA, 151 

Reclamation Act of 1906, 110 
Reclamation, Bureau of, 85, 261 



recreation, TVA, 62, 69, 143, 144, 150, 
193, 208-210 

program, 142 

background, 206-208 

state and local administration of, 212- 

studies, 210-212 
regionalism v. sectionalism, 12-13 
Regional Planning Council, 44 
Regional Studies, Division of, TVA, 44, 

Director of, 44 
function of, 39 
reservoirs, TVA, 92, 93, 94, 95, 96, 137, 
See also: land management 

fish and game, 189-192, 246 
development, 137, 243 
Reynolds Metals Company, 227 
river control, TVA, 
operations of, 91-94 
program, 77 
See also: water control 
River Control Branch, TVA, 90 
river transportation, 95 
TVA function in, 96-99 
removal of barriers to, 105-107 
Roosevelt, President Franklin D., 4, 24, 

29, 211, 260 
Roosevelt, President Theodore, 17, 85, 

Rural Electrification Administration, 
i3 2 > J 35> 2 48 

St. Louis, Missouri, 100 
St. Louis Post-Dispatch, 242 
San tee-Cooper reservoir, 246 
Santeetlah Dam, 78 
Schechter case, 29 

v. United States, 29 fn. 
Scientific Research and Development, 

Office of, 204 
Secretary to the Corporation, TVA, 26, 

See also: General Counsel 
Senate, United States, 24, 36, 66 

Committee on Expenditures in the 
Executive Departments, 68 
Shawnee Steam Plant, 149 
Sheffield, Alabama, 100 
Site Planning Section, TVA, 150 
Social and Economic Division, TVA, 

Soil Conservation Service, 174, 185, 272 
South, the, 13, 18, 123, 187 

South Carolina, 198, 209, 246 
University of, 

Press, 236 
Southeast, the, 106, 154, 171, 224, 226, 

227, 228, 229, 246 
South Holston Dam, 86, 87 
Southern Governors' Conference, 106 
southern states, the, 82, 105, 167 
Southwest, the, 206, 245 
state governments, 96, 97, 133, 134, 142, 

175, 176, 178, 195, 196, 202, 209, 
and TVA, 203, 212, 219, 223, 232- 

243, 250, 260, 265 
Structural and Heavy Equipment 

Branch, TVA, 90 
Supreme Court, United States, 16, 29, 

30, 31, 32, 33, 34, 105, 107, 267 
Swain County, North Carolina, 142, 144 
Swidler, Joseph C, 16 

Taft, Secretary of War, 17 

Tennessee, 1, 74, 83, 112, 141, 142, 150, 
156, ,172, 173, 185, 201, 204, 207, 
210, 212, 214, 234, 236, 238, 262 
extension service, 174 
legislature, 149, 209 
University of, 126 

College of Medicine, 204 
Preventive Medicine, Department 

of, 204 
Press, 236 

Tennessee Department of Vocational 
Education, 174 

Tennessee Electric Power Company, 20, 
78, 85 

Tennessee Electric Power Co. v. Ten- 
nessee Valley Authority, 33 fn. 

Tennessee Pollution Control Board, 201 

Tennessee State Planning Commission, 
142, 148 

Tennessee River, 1, 3, 4, 7, 16, 24, 25, 

3 8 > 39. 9 1 * 95- 97- 9 8 > lo8 > 110 > ll 7> 

148, 189, 198, 203, 222, 240, 241, 

245, 246, 253 
appraisal of navigation on, 102-104 
Basin, 92, 94, 233 

average rainfall in, 92 
control of, 77-94 
growth in traffic on, 97, 99-102, 105, 

multiple-purpose development of, 79- 

82, 94 
navigation system on, 84, 96 
physical characteristics of, 16-17 
pollution control, 199-203 
system, 127, 200, 201 



Tennessee River (continued) 

watershed, 25, 112, 165, 177, 184, 234 

See also: river transportation and 

water transportation 

Tennessee Valley, 1, 2, 3, 5, 7, 8, 9, 10, 

ii, 12, 14, 24, 29, 35, 47, 58, 74, 80, 

v 8i, 82, 86, 91, 93, 96, 98, 101, 112, 

113, 118, 120, 121, 124, 126, 133, 

137, 144, 148, 149, 150, 152, 163, 164, 

165, 167, 172, 173, 174, 175, 176, 

177, 182, 183, 184, 186, 187, 188, 189, 

190, 191, 194, 195, 198, 199, 200, 

201, 202, 204, 205, 206, 207, 208, 209, 
210, 211, 213, 214, 217, 233, 234, 
235, 236, 239, 240, 241, 242, 244, 
248, 249, 25O, 255, 256, 257, 258, 
259, 26l, 262, 263, 264, 267, 268, 
269, 271 

agricultural practice in, 169-176 
agriculture of, 2, 38, 163, 166, 171, 

coal industry of, 74 
forest lands of, 1, 179, 188 
forest resources in, 38, 177, 178, 180- 

181, 189, 269 
governors of, 242 
industrial development of, 100, 101, 

122, 123, 220-231 
mineral resources of, 1-2 
population of, 2 
per capita income of, 220, 238 
rainfall in, 77-78 
topography of, 77, 83 
Tennessee Valley Authority, 

administrative concepts and practices, 

43-46, 260, 261 
as a government corporation, 26-29 
central concern of, 6 
distinguishing features of, 4-7 
early years of, 39-41, 97, 260-266 
function of, 50 
goal of, 7 
intergovernmental relations, 9, 232- 


international interest in, 251-256 

introduction to, 3-15 

line divisions, 51 

organizational change, 42 

Organization Bulletin, 45 

problems faced by, 266-272 

staff agencies, 50-51 

technical and scientific contributions 
of, 244-248 
Tennessee Valley Authority Association 
of Professional Chemists and Chem- 
ical Engineers, 59 

Tennessee Valley Authority Engineers 

Association, 59 
Tennessee Valley Authority Act, 3, 4, 
12, 24, 27, 28, 34, 35, 36, 40, 63, 75, 
76, 79, 82, 94, 105, 108, 133, 135, 
155, 158, 193, 200, 207, 249, 260, 
261, 263, 265, 266, 267, 268, 272 
1933 statute, 24-26 
Board of Directors, 39, 41, 47, 136 
fertilizer development, 152 
financial statements of, 63, 66 
forestry, 177 

federal-state co-operation, 233 
land, 140, 141, 143, 144 
navigation, 83-84, 91 
on personnel administration, 52, 53, 

54> 58 
payments in lieu of taxes, 238, 239 
power, 109-111, 113, 121-122, 127, 

128, 130 
procurement, 73 
recreation, 211, 212 
revenues, 63 
wages of employees, 58 
water control, 91 
Tennessee Valley Trades and Labor 

Council, 58 
Traffic Section, TVA, 72 

function of, 73 
training, TVA, 60 

See: water transportation and river 
Transportation Act of 1940, 103, 107 
Transportation Branch, TVA, 72 

function of, 75 
Transportation Rates, Division of, TVA, 

Treasury Branch, TVA, 72 
Treasury, United States, 28, 135, 136, 

Tributary Watershed Representative, 

TVA, 36 
Truman, President Harry S., 250 
Tullahoma, Tennessee, 

Arnold Engineering Development 
Center, 120 
Tupelo, Mississippi, 113 

uniformity v. diversity, 121 

union-management, TVA, 

agreement with employees, 57-58 
co-operative committee, 59 
co-operative conference plan, 59 

unions, employee, TVA, 58-59 



United States, 2, 14, 18, 20, 21, 29, 31, 
54, 66, 71, 72, 80, 91, 95, 118, 153, 
156, 158, 171, 184, 206, 233, 244, 
245, 251, 254, 256 
Constitution of, 273 
eastern, 195, 246 
government, of, 53, 90, 111, 132 
Utah, 156 

Veterans' Preference Act, 52, 54 
Virginia, 1, 112, 190, 207, 234 

coal deposits in, 1 

Wagner Act, 57, 58 

War, Secretary of, 23, 24, 159 

War Department, United States, 22, 111, 

War Production Board, 148 
Washington, 163 
Washington, D. C, 12, 29, 73, 104, 139, 

Washington Office, TVA, 47 
Washington Representative, TVA, 47 
Washington Staff, TVA, 36 
Watauga Dam, 86, 87 
Watauga reservoir, 148 
Watauga River, 84, 142 
water control, TVA, 82, 91, 93, 193, 199, 


Water Control Planning, Division of, 
TVA, 90, 108 

waterfowl program, TVA, 191-192 

water transportation, 95, 96, 99, 100, 
101, 103-104, 105 

Watts Bar, 86, 138 

Watts Bar Dam, 85 

Watts Bar Steam Plant, 86, 87, 128 

Weather Bureau, United States, 93 

Wessell, O. S., 108 

West, the, 156, 159 

Western Fertilizer Association, 167 

Westvaco Chlorine Products Corpora- 
tion, 156, 161 

Wheeler Dam, 19, 20, 21, 23, 81, 85, 88, 
111, 196, 197, 210, 261 

Wheeler reservoir, 141, 191 

Wiersema, Harry, 77 

Wilson Dam, 19, 20, 21, 22, 23, 24, 25, 
30, 31, 32, 69, 81, 90, 111, 195, 204, 

Wilson, President Woodrow, 18 

Wisconsin, 207 

World War I, 4, 18, 152, 155, 159, 259 

World War II, 83, 97, 124, 127, 138, 
139, 148, 156, 158, 159, 160, 166, 
184, 204, 206, 212, 221, 222, 224, 
227, 259, 262 

Wyoming, 155 



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